Dividend Yield Calculator
Work out the dividend yield on a share, the yield on what you originally paid, the income your holding produces, and whether the payout is covered by earnings.
Estimate only. This is an information tool, not investment advice. Dividend yield is an income measure only and ignores share-price movement, dealing costs and tax. The value of shares and the income from them can fall as well as rise, and you may get back less than you invested.
Enter a share price and dividend
The dividend yield, your income and the payout's cover appear here as you type.
How dividend yield is calculated
Dividend yield is the annual dividend per share divided by the current share price, as a percentage. UK shares and dividends are both quoted in pence, so a share at 850p paying 51p a year yields 6.00%. Yield on cost uses the price you originally paid instead of today's price, which shows what your own investment is returning rather than what a new buyer would get. Dividend cover divides earnings per share by the dividend per share: cover of 2× means the company earned twice what it paid out, while cover below 1× means it paid out more than it earned, which is the clearest warning that a dividend may be cut.
Yield, yield on cost, and why they diverge
Dividend yield is the annual dividend divided by the current share price. It is a live number: it moves every time the price moves, even though the dividend has not changed. That is the single most important thing to understand about it, and the source of most of the confusion around it.
Yield on cost uses the price you actually paid. If you bought at 600p and the share is now 850p, a 51p dividend yields 6.00% to a new buyer but 8.50% on your money. Neither figure is wrong; they answer different questions. Yield tells you what the share offers today, which is the right measure for deciding whether to buy more. Yield on cost tells you what your existing holding earns, which is the right measure for deciding whether to hold.
Yield on cost is also the figure most often misused. A high yield on cost is a record of a good past decision, not evidence that the holding is still the best home for that capital. The money is worth what the shares are worth now, and it could be redeployed at today's yields anywhere.
A high yield is often a warning, not a bargain
Because yield rises as price falls, the highest-yielding shares in an index are frequently the ones the market expects to cut. A share whose price has halved on bad news will show a doubled yield right up until the dividend is reduced, at which point both the income and the capital are gone. This is the yield trap, and screening purely on headline yield walks straight into it.
The defence is to look at whether the payout is affordable rather than whether it is large. Dividend cover, earnings per share divided by dividend per share, is the standard UK check. Cover of 2× or more is comfortable; between 1.5× and 2× is reasonable for a stable business; below 1× means the company is paying out more than it earns, funding the difference from reserves, borrowing or asset sales.
Cover is a snapshot, so check the direction of travel too. A company with cover falling from 3× to 1.2× over three years is telling you something a single year's figure does not. Free cash flow is the harder test again, since earnings can be supported by accounting choices in a way that cash cannot.
How UK dividends are actually paid
Most UK companies pay twice a year: a smaller interim dividend and a larger final dividend, the latter usually approved by shareholders at the AGM. Some pay quarterly, and investment trusts increasingly do so to provide a smoother income. A few pay a special dividend after a disposal or an exceptional year, and that is worth stripping out before treating a yield as repeatable.
The date that matters is the ex-dividend date. Buy on or after it and the seller keeps that dividend, not you. The share price typically falls by roughly the dividend on the ex-dividend date, which is why buying just before it is not free income.
Investment trusts have a structural advantage worth knowing about: they can hold back up to 15% of income each year in revenue reserves and use it to maintain payouts in weak years. This is how some trusts have raised their dividend for decades without interruption, and it is not something an ordinary company can do.
Tax on UK dividends
Dividends held outside a tax wrapper are taxed at their own rates, above a separate dividend allowance, and those rates are lower than income tax rates but the allowance has been reduced repeatedly in recent years. Our dividend tax calculator works out the bill for your circumstances.
Inside a Stocks and Shares ISA there is no dividend tax and no Capital Gains Tax, and nothing to report on a tax return. For almost every UK retail investor building an income portfolio, filling the ISA allowance first is the single highest-return administrative decision available, and it takes no market judgement at all.
Dividends in a pension are also free of UK tax within the wrapper, with income tax applying on the way out. Note that a dividend yield quoted on a share is always a gross figure, so comparing it with a savings rate is only fair once you have accounted for how it will be taxed.
What yield does not tell you
Yield is income only. Total return adds capital growth, and over long periods a lower-yielding company growing its dividend at 7% a year usually beats a higher-yielding one that never raises it. Dividend growth compounds; a static dividend loses value to inflation every year.
Yield also says nothing about concentration risk. UK income portfolios have historically clustered in a handful of sectors, which means a single sector shock can cut a large share of the income at once. A yield figure calculated per holding will not surface that.
Finally, dividends are discretionary. Unlike a bond coupon, no dividend is contractually owed, and boards can cut or suspend one at any time, as many did in 2020. Treat a yield as an expectation rather than a promise, and size positions accordingly.
Worked example: 1,200 shares bought at 600p, now 850p
A holding showing a 6% yield to a new buyer, with earnings covering the payout twice over. These are the exact figures this calculator returns.
| Current share price | 850p |
|---|---|
| Annual dividend per share | 51p |
| Number of shares | 1,200 |
| Price paid per share | 600p |
| Earnings per share | 102p |
| Dividend yield | 6.00% |
| Yield on cost | 8.50% |
| Annual income | £612.00 |
| Monthly equivalent | £51.00 |
| Holding value | £10,200.00 |
| Holding cost | £7,200.00 |
| Dividend cover | 2.00× |
| Payout ratio | 50% |
The 8.50% yield on cost is the more flattering number and the less useful one: it reflects a purchase made at 600p, not what the £10,200 now tied up in the holding is earning. On today's value the income is 6.00%, and that is the figure to compare against anywhere else the money could go.
Frequently asked questions
- How do you calculate dividend yield?
- Divide the annual dividend per share by the current share price and multiply by 100. UK shares and dividends are both quoted in pence, so a share priced at 850p paying 51p a year yields 6.00%. Use the total dividend expected over the next twelve months, and strip out any one-off special dividend first, since including it overstates the repeatable income.
- What is a good dividend yield in the UK?
- There is no single figure, and chasing the highest is actively risky. The FTSE 100 as a whole has typically yielded in the region of 3 to 4%, and individual shares yielding far above that are often priced for an expected cut. A well-covered 4% from a company growing its dividend is usually worth more over time than an uncovered 9% that gets halved.
- What is dividend cover and what is a safe level?
- Dividend cover is earnings per share divided by dividend per share. Cover of 2× means the company earned twice what it paid out and has room to keep paying through a weaker year. Between 1.5× and 2× is reasonable for a mature business. Below 1× the dividend exceeds earnings and is being funded from reserves, borrowing or asset sales, which is the clearest single warning that a cut may be coming.
- What is the difference between dividend yield and yield on cost?
- Dividend yield uses today's share price, so it tells you what the share offers to anyone buying now. Yield on cost uses the price you originally paid, so it tells you what your own holding returns. A share bought at 600p and now worth 850p pays a 6.00% yield to a new buyer and 8.50% on your cost. Yield on cost is a record of a past decision and should not be used to justify holding capital that could earn more elsewhere.
- Why do high dividend yields sometimes signal trouble?
- Yield rises automatically when the price falls, so a collapsing share price produces a rising yield without the company doing anything. If the market expects a cut, the elevated yield is a prediction rather than an opportunity, and buying it can lose both the income and the capital. Checking dividend cover and the trend in earnings separates a genuinely cheap share from a yield trap.
- Do I pay tax on UK dividends?
- Dividends held outside a tax wrapper are taxed at dividend rates above a separate dividend allowance, which has been reduced substantially in recent years. Held inside a Stocks and Shares ISA there is no dividend tax, no Capital Gains Tax and nothing to declare, which is why using the ISA allowance first is usually the highest-value decision available to a UK income investor. Our dividend tax calculator works out the liability on unwrapped holdings.
- What is the ex-dividend date?
- It is the cut-off for entitlement. Buy on or after the ex-dividend date and the seller receives that dividend rather than you. The share price usually drops by approximately the dividend amount on that date, so buying immediately beforehand does not produce free income, it simply exchanges a little capital for a little income and creates a tax event for unwrapped holdings.
- How often are UK dividends paid?
- Most UK companies pay twice a year, an interim and a larger final dividend approved at the AGM. Some pay quarterly, and many investment trusts do so deliberately to smooth income. Investment trusts can also hold back up to 15% of income each year in revenue reserves to support payouts in weak years, which is why some have long unbroken records of dividend increases that ordinary companies cannot match.
Also known as: dividend calculator UK · dividend yield calculator · share dividend calculator · dividend income calculator · yield on cost calculator · dividend cover calculator
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