How To Calculate Dividend Yield

Dividend yield is a financial ratio that measures the amount of cash dividends paid out by a company in relation to its share price. It is expressed as a percentage and can be used to evaluate the income potential of a particular stock investment.

Here are the steps to calculate dividend yield:

1. Determine the annual dividend per share: To calculate the annual dividend per share, you can look at the company’s most recent dividend payment and multiply it by the number of times the company pays dividends in a year. For example, if a company pays a quarterly dividend of $0.50 per share, the annual dividend per share would be $2.00 (0.50 x 4).
2. Find the current share price: You can find the current share price of a stock by checking financial websites, such as Yahoo Finance or Google Finance.
3. Divide the annual dividend per share by the current share price: Divide the annual dividend per share by the current share price to get the dividend yield percentage. For example, if the annual dividend per share is $2.00 and the current share price is $50.00, the dividend yield would be 4% (2.00 ÷ 50.00 x 100%).

In summary, the formula to calculate dividend yield is:

Dividend Yield = Annual Dividend per Share / Current Share Price x 100%

Note that the dividend yield can vary over time based on changes in the company’s dividend payments and stock price. It is important to keep track of both of these factors when evaluating a stock for its income potential.