What Is Dividend Yield? How to Calculate It the Right Way
Dividend yield shows what share of a stock's price a company pays out to shareholders over a year. Here's how to calculate it and why the highest percentage isn't always the best choice.
The formula
Dividend yield = annual dividends per share / share price × 100%.
Example: a share costs ₽200, and over the year the company paid ₽16 per share. The yield is 8%. If the price drops to ₽160 with the same payouts, the yield becomes 10%.
Why a high yield can be a trap
- The price fell because of problems. The yield went up not because the company pays more, but because the stock got cheaper.
- A one-time payout. One large dividend doesn't mean it will happen every year.
- It pays out more than it earns. If dividends exceed profits, they'll soon be cut.
What to look at besides the percentage
| Metric | What it shows |
|---|---|
| Payout history | Whether the company has paid consistently for years |
| Payout ratio | Whether it pays out more than it earns |
| Dividend policy | How the company says it will set payouts |
| Debt | Whether it borrows money to pay dividends |
Dividends are taxed, and the share price usually drops after the record date. More details in the article dividends explained simply and in the lesson stocks.
Aspiro Invest is a medium-term portfolio: what to hold, when to review it, and where the protective levels are.
- Yield = annual dividends / price.
- A high percentage often means a fallen price and underlying problems.
- Look at payout history and profits, not just the percentage.
Frequently Asked Questions
What is the dividend record date?
The date on which the list of shareholders eligible for the payout is fixed. To receive the dividend, you need to buy the shares in advance, taking the exchange's settlement cycle into account.
Is a company required to pay dividends?
No. The company decides on each payout separately and can reduce or cancel dividends.
What dividend yield is considered good?
There's no universal number. Compare it with deposit and bond rates and with the company's own history.
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