Dividend Yield Calculator: Work Out Your Share Yield and Income

Use the dividend yield calculator

Pop in the annual dividend per share (or the total dividends a fund pays) and the price you paid or the current price, and the tool above returns the yield and your expected yearly income. Change the number of shares to see the cash a holding throws off across a year.

What dividend yield actually tells you

Dividend yield is the income a share pays out over a year, expressed as a percentage of its price. It answers a simple question: for every £100 you put into this share today, how much cash will it hand back over the next twelve months? A 4% yield means roughly £4 of dividends for every £100 invested.

It matters because the headline share price tells you nothing about income on its own. Two companies might both trade at £10 a share, but if one pays 50p a year and the other pays 20p, the first yields 5% and the second 2%. If your goal is income — topping up a salary, funding part of retirement, or reinvesting to compound — yield is the number that lets you compare like with like.

One thing to hold in your head: yield moves inversely with price. When a share price falls and the dividend stays the same, the yield rises. That can flag a bargain, or it can be the market warning you a cut is coming. More on that in the mistakes section.

The dividend yield formula

The maths behind any dividend yield calculator is short and worth knowing by heart:

Dividend yield (%) = (annual dividend per share ÷ share price) × 100

So if a share pays 45p a year and trades at £9.00 (900p), the yield is (0.45 ÷ 9.00) × 100 = 5.0%.

For a fund or a whole portfolio where you think in pounds rather than pence per share, the same logic applies to totals:

Portfolio yield (%) = (total annual dividends ÷ total value invested) × 100

And to get the cash itself rather than a percentage:

Annual dividend income = number of shares × annual dividend per share

Two practical notes on the inputs. First, keep the units consistent — both in pence or both in pounds, never one of each, or your yield comes out a hundred times too big or too small. Second, decide whether you are using the price you paid (your cost yield, often called yield on cost) or today's price (the current yield). They drift apart over time: if you bought years ago and the dividend has grown, your yield on cost can be far higher than the yield a new buyer gets today.

Worked example: Priya weighs up an income share

Priya has £6,000 sitting in her stocks and shares ISA and wants a steady income stream. She is looking at a FTSE 100 company trading at £8.00 a share that paid 36p in dividends over the last year.

• Yield: (0.36 ÷ 8.00) × 100 = 4.5%
• Shares she can buy: £6,000 ÷ £8.00 = 750 shares
• Annual income: 750 × £0.36 = £270 a year

Because the holding sits inside her ISA, that £270 is free of UK dividend tax — she keeps the lot. If she held the same shares in a general dealing account instead, the income would count towards her dividend allowance and could be taxed beyond it.

Now a second scenario to show how yield shifts with price. Suppose six months later the share price slips to £7.20 but the dividend is held at 36p. A new buyer's yield is now (0.36 ÷ 7.20) × 100 = 5.0%. Priya's income hasn't changed — she still gets £270 on her 750 shares — but her yield on cost is still 4.5%, while the market is offering newcomers 5.0%. Same dividend, different yield, depending purely on the price you pay.

A third, portfolio-level example. Tom holds three income shares worth £12,000 in total and expects £540 of dividends across the year. His blended portfolio yield is (540 ÷ 12,000) × 100 = 4.5%. That single figure lets him compare his income portfolio against, say, a savings account or a bond fund on the same footing.

Yield is not the whole story: total return

A high yield looks attractive, but income is only one half of what an investment gives you. The other half is capital growth (or loss) in the share price. Put together, they make your total return:

Total return = dividend income + change in share price

A share yielding 6% that drops 10% in price has handed you a negative total return for the year, even though the dividend looked generous. A share yielding 2% that climbs 12% has done far better overall. Income investors who chase the biggest yield in isolation often end up holding shrinking companies. Use the yield to size up income, but judge an investment on the full picture — the strength of the business, whether the dividend is covered by profits, and the prospect for the price.

If you reinvest dividends rather than spend them, yield becomes the engine of compounding. Reinvested income buys more shares, which pay more dividends, which buy more shares again. Our compound interest calculator shows how that snowball can build over a decade or two, and the investment calculator lets you project a pot with regular contributions on top.

What counts as a good dividend yield in the UK?

There is no single magic number, but some rough markers help. Across the FTSE 100, the average yield has tended to sit somewhere around the low-to-mid single digits, so a yield in the 3% to 5% range is broadly typical for an established UK income share. A yield that is far above the market — 8%, 9%, 10% — is not automatically a prize. Very high yields often mean the market expects the dividend to be cut, which would drop the real income you receive below the headline figure.

Two checks worth making before you trust a yield:

• Dividend cover: roughly how many times the company's earnings could pay the dividend. Cover comfortably above 1 suggests the payout has room to survive a tough year; cover below 1 means the company is paying out more than it earns, which rarely lasts.
• Track record: a long history of maintained or rising dividends is a better sign than a single eye-catching year.

For context on building an income portfolio sensibly, the regulator-backed guidance at MoneyHelper's investing section is a sound, non-commercial starting point.

Tax on the dividends you receive

Yield tells you the income; tax decides how much of it you keep. Dividends held inside an stocks and shares ISA or a pension are free of UK dividend tax. Outside those wrappers, dividends are covered by a tax-free Dividend Allowance of £500 for 2026/27. Income above that allowance is taxed at rates that depend on your income tax band.

Source: gov.uk — Tax on dividends, checked for the 2026/27 tax year. Dividends are treated as the top slice of your income, so the rate you pay depends on how much other income you have. This calculator works out the yield and the income; to see the actual tax due on dividends above the allowance, use our dedicated dividend tax calculator, which applies your band and the allowance for you.

The tax rates apply across the UK. Unlike income from a salary, dividend tax rates are the same in Scotland as in the rest of the UK — Scotland sets its own rates only for earned, non-savings, non-dividend income, so a Scottish investor and an English investor pay identical tax on the same dividends.

Common mistakes when calculating dividend yield

• Mixing pence and pounds. The most frequent slip. If the price is in pence (say 850p) and the dividend in pounds (£0.34), divide like with like — either 34p ÷ 850p or £0.34 ÷ £8.50. Both give 4%.
• Using a special or one-off dividend as if it were annual. A company that pays a large special dividend one year can show a huge trailing yield that won't repeat. Strip out one-offs and use the ordinary, repeatable payout.
• Confusing forward and trailing yield. Trailing yield uses the last twelve months of dividends actually paid; forward yield uses the dividends forecast for the year ahead. After a cut or an increase, the two can differ sharply. Know which one you are looking at.
• Chasing the headline yield into a value trap. A yield that has spiked because the price has collapsed is often a warning, not an opportunity. Check whether the dividend is covered and sustainable before treating that yield as real.
• Forgetting the wrapper. The same shares pay very different net income depending on whether they sit in an ISA, a pension or a taxable account. Always factor in where the holding lives.
• Ignoring dealing and platform costs. Trading fees, foreign-exchange charges on overseas shares and platform fees all nibble at your real return. They don't change the yield figure, but they do change what lands in your pocket.

What to do with your yield figure

Once you have the yield, use it as a comparison tool, not a verdict. Line it up against the yield on cash savings, the income from other shares, and the total-return prospects of each option. If you are investing for income, sanity-check that the dividend is covered and has a decent history before you commit. If you are reinvesting, model the compounding rather than guessing — small differences in yield add up dramatically over twenty years.

And keep your wrapper in mind from the start. Holding income shares inside an ISA or pension can wipe out the dividend tax entirely, which often matters more to your net income than squeezing an extra fraction of a per cent out of the yield.

These figures are estimates for general guidance only and are not personal tax or financial advice. Investments can fall as well as rise, and dividends are not guaranteed. Speak to a regulated adviser before making decisions.

Related calculators

Carry on planning your investments with these TaxFly tools:

• Dividend Tax Calculator — work out the tax due on dividends above your allowance.
• Investment Calculator — project a pot with regular contributions and growth.
• Compound Interest Calculator — see how reinvested dividends snowball over time.
• ISA Calculator — check what you can shelter tax-free this year.