2026-08-04
What Is Dividend Yield and How to Calculate It
Dividend yield measures how much cash a stock returns to you per dollar invested. It is the single most-quoted number in dividend investing — and the most misunderstood.
The formula
Dividend yield = annual dividend per share Ă· current share price Ă— 100. If a stock pays $2 per share each year and trades at $100, its yield is 2%.
Many companies pay quarterly or monthly. If a stock pays $0.50 per month, its annualized dividend is $6.00 — and on a $100 share that is a 6% yield.
Why it moves
Yield changes every time the price changes, even when the dividend is unchanged. A stock that falls 20% looks 25% more “yielding” overnight. That is why a spiking yield is often a falling-price warning, not an opportunity.
Yield is only half the story
- A high yield + healthy payout ratio can be a great income stock.
- A high yield + above-100% payout ratio is a dividend cut waiting to happen.
Use the dividend yield calculator to compute a current yield, then check the payout ratio before trusting it.
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Try the dividend calculator or browse all dividend articles. Educational only — not financial advice.