Calculate the dividend yield, yield on cost, and annual income from a dividend-paying stock or ETF based on current price, annual dividend, and number of shares held.
The dividend, and the position holding it
What the share pays
$
Total dividends paid per share per year. Multiply the latest quarterly dividend by 4.
$
The stock’s current market price per share.
Your position in it
shares
Number of shares you hold or plan to purchase.
$
The price you originally paid per share (used for yield-on-cost calculation).
Dividend Yield
4.00%
Annual dividend divided by current share price.
Formula verified 25 September 2026
Yield on Cost
5.00%
Annual dividend divided by your original purchase price — shows your personal income return rate.
Annual Dividend Income
$200.00
Total dividends received per year across all shares.
Quarterly Income
$50.00
Expected dividend income each quarter (most stocks pay quarterly).
Monthly Income (Est.)
$16.67
Annual income divided by 12 — useful for budgeting dividend income monthly.
The same shares yield 4% to a buyer today and 5% to you
Dividend yield divides the annual dividend by the current share price: $2 on a $50 share is 4%. Yield on cost divides the same dividend by what you actually paid: $2 on a $40 purchase is 5%. Both are correct, and they answer different questions. The 4% tells you what the market is offering anyone buying today. The 5% tells you what your own capital is earning.
The two separate the moment the price moves. Because the dividend is fixed in the numerator, a rising share price lowers the current yield while leaving your yield on cost untouched — which is why a long-held position can show a modest headline yield and still be paying you well. A falling price does the reverse, and a very high current yield is often the market marking a stock down because it expects the dividend to be cut.
100 shares at $2 is $200 a year, which arrives as $50 a quarter
A yield is easier to act on once it is money. The default holding pays $200 a year, and because most US companies distribute quarterly that lands as four payments of $50. The monthly figure of $16.67 is the same income divided twelve ways — useful for testing an income plan against monthly outgoings, though no company actually pays on that schedule.
To go the other way, divide the income you want by the yield. Living on $2,000 a month from dividends alone at a 4% yield needs $600,000 invested; at 3% it needs $800,000. That arithmetic is usually more sobering than the percentage suggests, and it is the reason most income plans combine dividends with drawdown rather than relying on yield alone.
A yield rises just as fast when the price falls as when the dividend rises
Yield is a ratio, and a ratio can climb for a good reason or a bad one. A company raising its dividend lifts the numerator. A company whose share price has halved lifts the yield just as much without paying a cent more. Screening for high yield alone systematically selects for the second case, which is why it so often produces a portfolio of businesses in trouble.
The check is whether the payment is affordable. Compare the dividend against earnings and, better, against free cash flow: a payout ratio comfortably under 100% can be sustained, one above it is being funded from reserves or borrowing. A long record of maintained or rising payments through a downturn is worth more than a headline yield, because the dividend you keep receiving is the only part of the yield that is real.
A 4% yield on a share that falls 10% is a 6% loss
Total return is the dividend plus the price change. Shares are not bonds: nothing about a dividend protects the capital behind it, and a portfolio chosen purely for income can lose more in price than it ever pays out. Judging a holding on yield alone hides that entirely.
The opposite error is just as common. Companies that pay nothing can compound faster by reinvesting everything, and many of the largest returns of the last two decades came from businesses with no dividend at all. Yield is a useful description of how a return is delivered — as cash you receive, rather than value you must sell to access — not a measure of how large that return is.
A forward-looking figure built entirely from a backward-looking number
Enter the last four quarterly payments and the yield is trailing: it describes what has already been paid. Enter management’s guidance and it is forward. Neither is a promise. Dividends are declared payment by payment and can be cut without notice, and a single special dividend inflates a trailing figure that will not repeat.
Taxes and currency are outside the model. Qualified dividends are taxed at long-term capital-gains rates, ordinary dividends at your marginal rate, and foreign dividends are often subject to withholding at source before you see them. For a holding in an overseas market, exchange-rate movement can easily exceed the yield in either direction.
Frequently Asked Questions
What is a good dividend yield?
Yields between 2–5% are typical for stable dividend-paying stocks and ETFs. Yields above 7–8% may signal dividend cut risk — this is called a "dividend trap." High-yield bond funds can yield 5–8% with higher credit risk.
What is the difference between yield and yield on cost?
Current yield reflects income relative to today’s price. Yield on cost reflects income relative to what you paid. For long-term holders whose dividends have grown, yield on cost is often much higher than the current yield.
Are dividends guaranteed?
No. Companies can cut or eliminate dividends at any time. Dividend Aristocrats (S&P 500 companies with 25+ consecutive years of dividend increases) offer more stability, but no dividend is legally guaranteed.
How does DRIP affect my income over time?
Dividend reinvestment (DRIP) automatically buys more shares with each dividend, increasing both future dividends and share count. To approximate that compounding effect, you can use the Compound Interest Calculator, treating reinvested dividends like contributions that grow over time.
Why is yield on cost higher than the current yield in the example?
Yield on cost divides the dividend by what you originally paid, while current yield divides it by today’s price. If the share price has risen since you bought, your purchase price is lower than the current price, so the same dividend represents a larger percentage of your cost. As a company raises its dividend over the years, yield on cost tends to climb further.
How do taxes affect dividend income?
In the US, qualified dividends are generally taxed at long-term capital gains rates, while non-qualified (ordinary) dividends are taxed as regular income. Dividends held in tax-advantaged accounts like an IRA are treated differently. This calculator shows pre-tax income, so your after-tax cash flow will be lower depending on your situation.
Sources & References
Figures on this page are checked against primary, authoritative sources. Links open in a new tab.
Returns are assumptions, not guarantees. Actual results may vary because of market performance, taxes, fees, inflation, and timing. This is an educational projection, not investment advice.