How to calculate dividend yield

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how to calculate dividend yield

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LectureNotes: Dividend yield is a financial ratio that shows the amount of cash generated per share as a percentage of the stock’s market price. It is calculated by dividing the annual dividend per share by the stock price per share and multiplying the result by 100.

Here is the formula for calculating dividend yield:

Dividend Yield = (Annual Dividend Per Share / Stock Price Per Share) * 100

To calculate dividend yield, you need two pieces of information: the annual dividend per share and the stock price per share.

  1. Annual Dividend Per Share: This is the total amount of dividends paid out to shareholders over the course of a year divided by the number of outstanding shares. You can find this information in the company’s annual report or on financial websites.

  2. Stock Price Per Share: This is the current market price of one share of the stock. You can find this information on financial websites or by checking quotes on a stock market platform.

Once you have these two values, plug them into the formula mentioned earlier to calculate the dividend yield.

Keep in mind that dividend yield is just one factor to consider when evaluating an investment. It is important to analyze other financial metrics and performance indicators to make informed investment decisions.