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Dividend Yield Calculator

Calculate dividend yield, payout ratio, coverage, income planner & multi-stock comparison

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Dividend Yield Calculator

Enter annual DPS and current stock price to compute yield.

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Dividend Yield = (Annual DPS / Current Price) × 100
Annual Income = DPS × Shares Held
Monthly Income = Annual Income / 12

Worked Examples

High-Dividend PSU Stock

DPS = ₹18, Price = ₹300
Yield = (18/300)×100 = 6.0%

Typical of PSU energy companies (Coal India, ONGC). High yield but modest growth outlook.

High Yield

IT Growth Stock

DPS = ₹45, Price = ₹3,200
Yield = (45/3200)×100 = 1.4%

Growth companies retain more earnings for expansion. Low yield compensated by capital appreciation.

Low Yield

DRIP Compounding

₹30,000 invested @ ₹300
100 shares, ₹12 DPS, 5% growth
Year 10 income: ~₹1,955

Reinvesting dividends accelerates wealth. After 10 years, total cumulative income exceeds ₹15,000.

Compounding

What Is Dividend Yield?

Dividend yield is one of the most important metrics for income-seeking investors in the stock market. It expresses the annual dividend paid by a company as a percentage of its current share price. A stock paying ₹12 per share in annual dividends and trading at ₹300 has a dividend yield of 4%. This tells you that for every ₹100 invested, you receive ₹4 in dividend income per year.

In India, dividend yield is especially significant for long-term investors looking to build passive income from equities. PSU companies in sectors like energy, mining, and banking are traditionally known for their high dividend yields, often exceeding 5–6%. IT and pharmaceutical companies tend to pay modest dividends, preferring to reinvest profits into research and growth.

Dividend Yield Classification

Yield RangeClassificationTypical Examples (India)
Above 4%High YieldCoal India, ONGC, Power Finance Corp
2% – 4%Moderate YieldITC, HDFC Bank, Asian Paints
Below 2%Low YieldInfosys, TCS, Wipro

Dividend Payout Ratio Explained

The dividend payout ratio measures what fraction of a company's earnings are returned to shareholders as dividends. It is calculated as (DPS / EPS) × 100. A conservative payout ratio (below 40%) indicates a company retaining most profits for reinvestment. A high payout ratio above 80% may signal that dividends are stretched — unsustainable if earnings decline even slightly.

Coverage Ratio and Dividend Safety

The dividend coverage ratio (EPS / DPS) tells you how many times over a company can pay its declared dividend from earnings. A ratio of 2x or above is safe — the company earns twice what it pays out. A ratio below 1.5x deserves caution; if profits dip, the company may cut the dividend.

Yield on Cost (YoC) — The Long-Term Investor's Metric

While dividend yield is calculated on current market price, yield on cost uses your original purchase price. If you bought a stock at ₹200 five years ago and the company now pays ₹12 annually, your YoC is 6% regardless of where the stock trades today. Long-term investors who hold growing dividend stocks often achieve YoC figures far above what the market yield suggests, making YoC a powerful measure of portfolio income efficiency.

DRIP and Dividend Compounding

A Dividend Reinvestment Plan (DRIP) reinvests all dividend cash flows into purchasing more shares of the same company. The mathematics of compounding means that each additional share purchased generates its own dividends, which in turn purchase more shares. Over a 15–20 year horizon, DRIP can multiply the total return significantly compared to simply collecting dividends as cash.

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Frequently Asked Questions

What is dividend yield and how is it calculated?
Dividend yield is the annual dividend per share divided by the current stock price, expressed as a percentage. Formula: Dividend Yield = (Annual DPS / Current Price) × 100. For example, if a stock pays ₹12 per share annually and trades at ₹300, the yield is 4%. It tells investors how much income they earn relative to their investment.
What is a good dividend yield for Indian stocks?
In India, a dividend yield above 4% is considered high and typical of PSU companies like Coal India, ONGC, and Power Finance Corporation. A yield of 2–4% is moderate and seen in established private sector companies. Anything below 2% is low and common in growth-oriented IT and technology companies that prefer retaining earnings for reinvestment.
What is the dividend payout ratio?
The dividend payout ratio is the percentage of earnings paid out as dividends. Formula: Payout Ratio = (DPS / EPS) × 100. A payout ratio below 40% is conservative, 40–60% is balanced, 60–80% is high but sustainable, and above 80% may be unsustainable as the company has little earnings left for growth or debt repayment.
What is dividend coverage ratio?
Dividend coverage ratio measures how many times a company can pay its dividend from earnings. Formula: Coverage = EPS / DPS. A ratio above 2x is considered safe. A ratio of 1.5–2x is adequate, while below 1.5x is risky as the company may struggle to maintain the dividend if earnings decline.
What is yield on cost (YoC)?
Yield on cost (YoC) is the dividend yield calculated on your original purchase price rather than the current market price. Formula: YoC = (Current DPS / Purchase Price) × 100. If you bought a stock at ₹200 and it now pays ₹12 per share annually, your YoC is 6% even if the current market yield is only 4%. YoC shows the true income return on your original capital.
What is DRIP and how does it grow wealth?
DRIP stands for Dividend Reinvestment Plan. Instead of receiving dividends as cash, you use them to buy additional shares of the same stock. Over time, compounding accelerates wealth — more shares generate more dividends which buy even more shares. The Dividend Income Planner tool in this calculator models this compounding effect year by year.
How is dividend income taxed in India?
Since April 2020, dividends from Indian companies are taxable in the hands of investors at their applicable income tax slab rate. If your total dividend income exceeds ₹5,000 from a single company in a financial year, TDS is deducted at 10%. For NRIs, TDS is 20% plus surcharge and cess. Dividend income must be declared under "Income from Other Sources" in your ITR.