What is a Dividend Yield Calculator

Before we delve into understanding what a dividend calculator is, we first need to understand the concept of dividend and dividend yields. In simple words, a dividend is simply a portion of the company’s profits distributed to its shareholders. The company distributes a portion of its profits to its shareholders to reward them for being investors in the company. So, dividends contribute to the shareholder’s return of investment.

On the other hand, is the ratio of the company’s annual dividend per share (DPS) to the market price of the stock. Don't confuse the dividend yield with the dividend payout ratio, which is the ratio of the DPS to EPS (Earnings Per Share) of the company. So, essentially the dividend yield is calculated dividing the company annual dividends by its current market price. So for example, if the company’s share price trades at Rs.100, and the annual DPS is Rs.5, then the dividend yield is 5%.

Dividend Yield Calculator

However, this gives you the company’s current dividend yield, and this data is anyway made public by the company. However, what’s your dividend yield? What is your return on investments generated by dividends received? So, to calculate your dividend ratio, you divide the annual dividend with your average purchase price.

Now, this data is something you have to calculate by yourself, and this where a dividend calculator comes in: it helps you calculate your dividend yield.

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Frequently Asked Questions on the Dividend Yield Calculator

To calculate dividend yield, we divide the annual dividend with the current market price of the stock. Dividend Yield = (Annual Dividend Paid / Current Market Price) * 100

You need only the most basic stock market knowledge to use the stock dividend calculator. You only need to enter the dividend and your purchase price to find out the dividend yield you are generating.

Yes, you can use a dividend calculator to shortlist stocks, if you are focusing on constructing a high yielding dividend portfolio.

While a stock dividend may hold steady quarter-after quarter, the dividend yield can change daily because it is linked to the stock price. For example if the stock rises the yields will drop.

There is no universal answer to this question, as the answer will vary from investor to investors based on their investing goals. A growth investor may completely ignore dividend yield, dividend focus investors prefer investments with high dividend yields.
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