The dividend yield is very easy to calculate. The dividend yield formula requires two numerical values. Before calculating the yield, it is important to understand the different types and forms of yield that can be calculated using the same formula.

Dividend Yield

The standard dividend yield reflects the percentage of how much the dividend represents when compared with the current stock price.

Yield on Cost

The Yield on cost is calculated the same way but instead of using the current share price and the current annual dividend payment, it is calculated using the stock value at which it was purchased and the current annual dividend yield. This yield formula calculates the performance of the purchase. Ideally, everyone would like to see the percentage of this calculation go up over time as the company increases its annual dividend payout.

Dividend Yield Formula

The way to calculate dividend yield is very simple.

Dividend Yield = ( Annual dividend / Current stock price ) x 100

If we were to adjust the dividend yield formula and replace the current stock price with the stock price when it was purchased, we would get the yield on cost.

If you do not want to calculate the dividend yield formula yourself, there are plenty of websites that calculate it automatically based on the current stock price. What you will not find that easily are sites that can calculate your yield on cost. This is because, to calculate that, they need to know the price at which you purchased the stock. There are a couple of websites that allow you to create an account and build your portfolio. Using that data they can calculate your yield on cost. The dividend yield is a good number to follow but it should not be the factor that makes you decide if a stock is worth purchasing or not. The dividend yield formula can indicate a lot of things including if the stock price has dropped or if the payout is unrealistically high.