Guides · Stocks, ETFs and markets
How to calculate dividend yield
In short: Yield = annual dividend ÷ share price × 100. A $50 stock paying $2 a year yields 4%. The figure changes every day with the price.
An example
A stock at $80 with a $3.20 dividend yields 4%. If the price drops to $64, the yield rises to 5% without anything changing at the company.
Payout ratio
The share of profit paid out as dividends. Above 100%, the company pays more than it earns: not sustainable for long.
Total return
Dividends plus price change. A stock yielding 6% that loses 10% a year loses money.