Dividend Yield Calculator 💸
Analyze your potential income stream. Calculate a stock's **Dividend Yield**, **Annual Income**, and **Payout Ratio** for effective income investing.
Stock and Payout Details
Understanding Dividend Metrics
Dividends represent a portion of a company's profit distributed to its shareholders. The **Dividend Yield** is a key metric for income investors, measuring the rate of return you get purely from the dividends.
Core Formulas
1. Dividend Yield (%) = (Annual Dividend Per Share / Current Stock Price) × 100
2. Annual Income = Annual Dividend Per Share × Number of Shares
3. Payout Ratio (%) = (Annual Dividend Per Share / Earnings Per Share) × 100
A high payout ratio (e.g., above 75%) might indicate that the dividend is not sustainable, as the company is distributing too much of its earnings. However, this varies by industry (e.g., REITs often have high payout ratios).
The Role of Income Investing
Dividend investing focuses on creating a reliable cash flow, often reinvesting the payouts to buy more shares, which accelerates the growth of future dividend income through compounding.