How It Works

Dividend yield tells you what percentage of a stock’s price you receive annually in dividends. Higher yield means more income per dollar invested, but yield alone doesn’t tell the whole story.

Syntax

=annual_dividend_per_share / current_share_price

Format as percentage.

Example

Stock Analysis:

Current Price: $150
Annual Dividend: $6.00 per share

Formula: =6/150

Result: 4% dividend yield

For every $100 invested, you receive $4 in annual dividends.

Calculating from Quarterly Dividends

Most companies pay quarterly. Annualize by multiplying by 4:

=quarterly_dividend * 4 / price

Or sum the last four quarters:

=SUM(Q1, Q2, Q3, Q4) / price

Example: $1.50 quarterly dividend, $150 stock:

=$1.50 * 4 / $150 = 4%

Building a Dividend Tracker

Stock	Price	Annual Div	Yield	Shares	Annual Income
VYM	$110	$3.30	3.0%	50	$165
SCHD	$75	$2.70	3.6%	80	$216
JNJ	$155	$4.76	3.1%	30	$143
Total					$524

Formulas:

Yield: =C2/B2
Annual Income: =C2*E2
Portfolio Yield: =SUM(F2:F4)/SUMPRODUCT(B2:B4,E2:E4)

Yield Benchmarks

Yield Range	Interpretation
0-1%	Growth focus, minimal dividend
1-2%	Typical S&P 500 stock
2-4%	Good dividend payer
4-6%	High yield (verify sustainability)
6%+	Very high yield (possible red flag)

Warning: Extremely high yields often signal trouble - the price dropped faster than dividends, or a cut may be coming.

Yield on Cost

Track your personal yield based on what you paid, not current price:

=annual_dividend / your_purchase_price

Example:

Bought at: $100
Now pays: $6 dividend
Yield on cost: 6%

Even if current yield is 4% (price rose to $150), YOUR yield is 6% based on what you paid.

Forward vs. Trailing Yield

Trailing Yield

Based on dividends already paid:

=last_12_months_dividends / current_price

Forward Yield

Based on expected future dividends:

=projected_annual_dividend / current_price

Forward yield matters more if dividend was recently raised or cut.

Income Goal Calculator

How much do you need invested to generate target income?

=target_annual_income / average_yield

Example: $20,000/year income at 3% yield:

=$20,000 / 3% = $666,667 needed

Target Income	@ 2% Yield	@ 3% Yield	@ 4% Yield
$10,000	$500,000	$333,333	$250,000
$20,000	$1,000,000	$666,667	$500,000
$40,000	$2,000,000	$1,333,333	$1,000,000

Dividend Growth

A stock yielding 2% but growing dividends 10%/year may beat a static 4% yielder:

Year	2% Growing 10%	4% Static
1	$2.00	$4.00
5	$3.22	$4.00
10	$5.19	$4.00
20	$13.46	$4.00

Future dividend formula:

=current_dividend * (1 + growth_rate)^years

Pro Tips

Don’t chase yield - unusually high yields often precede dividend cuts
Check payout ratio - dividends should be less than ~60% of earnings for safety
Look at dividend history - “Dividend Aristocrats” have raised dividends 25+ years
Consider total return - dividend + price appreciation matters more than yield alone
Tax efficiency - qualified dividends get favorable tax treatment

Common Errors

Using quarterly dividend as annual: Multiply by 4 for annualized yield
Ignoring special dividends: One-time dividends inflate trailing yield
Comparing across sectors: Utilities naturally yield more than tech stocks

Dividend Yield