Dividend Yield Calculator

How to Use the Calculator:

1. If you are in the 'Home' page, please Click on the post title to enter the 'Post Page' and proceed.
2. Please Wait for the calculator/ excel sheet to load - it may take a minute depending on the speed of your internet connection.
3. Please study the post/ article "What is Dividend Yield?" for proper prior understanding.
4. Please enter your values for 'Current Market Price (CMP)' and 'Dividend Per Share'.
5. Please input your values only in the designated cells (filled with yellow) in the excel sheet. All other cells are protected and are not intended to be altered.
6. To clear the contents of the designated cells please refresh the page.
7. This dividend yield calculator is currency neutral - that is it can be used for any currency.

Yield Slide

Interest Yield

Yield Definition

Meaning/ Definition:

Companies pay interest on bonds and dividends on shares on the face value (nominal value) of the instrument. When these instruments are freely traded on stock exchanges, the price actually paid by the investor for the share or bond is different from the face value. Therefore, when the interest or dividend is calculated on the actual price paid, then the return is different from the one calculated on the face value. This is the actual return or yield obtained by the investor.

Examples:

Following example illustrates interest yield on a bond:

A separate article dividend yield explains with example in the context of dividends.

Related Links:

Distinction Between Rate of Interest and Interest Yield

What is the Relationship Between a Bond's Market Price and Its Yield to Maturity?

What Is Dollar Cost Averaging?

When you buy shares at different prices on various dates the result is an amazing thin called the 'Dollar Cost Averaging' having a profound impact on your portfolio and returns on your investments.

Dollar cost averaging is a nice sounding term for a simple concept of weighted average cost. let us see the example from our educational portfolio 'Portfolio 2K15'.

The ‘Dollar Cost Averaging’ is done only a way of Reporting. Your port folio shows the average holding cost at a glance for your convenience. However when you click on the name of the scrip the detailed page opens showing the various purchases on the various dates at various prices. Therefore I would say that the actual data and records remain intact and only in the report the holdings are dollar cost averaged.

If we examine my favourite scrip NMDC Ltd., in April 2016 we are holding 444 shares at weighted average holding cost of Rs.107.58. If we go deeper into the detailed purchases on various dates it will look as shown in the following table:

We can see that beginning with a price of Rs.130.48 in March, 2015 when the market was high, we were able to buy the shares at as low a price as Rs.81.35.

The beauty of dollar cost averaging is that over a very, very long period of time of say three to four decades, one is able to purchase the scrips at various levels, from very low and the weighted average cost is optimal, making timing the market, which is extremely difficult, irrelevant.

The second advantage is one can achieve spectacular dividend yield through dollar cost averaging. NMDC is quite generous in paying dividends and the yield is generally 10%, which on a tax free basis is simply superb. Suppose after 20 years the price of the share is Rs.800 and the dividend yield at that time is 10% it means the company paid a dividend of Rs.80 per share. Such a dividend on the 444 shares purchased at an average cost of Rs.107.58 is yield of 74.36% per annum. If you consider the capital appreciation, your 444 shares bough at and average Rs.107.58 are valued Rs.800 apiece, giving a return of 643% in twenty years. 

From the above it becomes clear how Riches are built on stock markets through prudent investments over long periods of time through dollar cost averaging. 

What is Dividend Yield?

It is not uncommon for readers of newspapers to come across companies listed on stock exchanges to come out with advertisements proclaiming their stellar annual results. These advertisements may most probably include an item on dividends stating, “Annual Dividend 300%”. While the reader may be awestruck by the large percentile number, some may not have actually understood its actual import. What is a dividend, annual dividend paid and dividend yield? Let us examine in the following paragraphs.

Dividend:

Companies exist to produce products and render services to satisfy the needs of people. In the process of meeting customer needs, corporations also strive to earn profits and distribute a portion of the profits to the shareholders in the form of dividends. In other words, dividends are the rewards to investors for having invested in the company.

Quantum of Dividend:

Dividend paid can be expressed in many different ways; as an absolute figure like $350 million or as a percentage of the total net profit of the company, 30% of the net profits or as dollars per share, say $0.50 per share or finally as a percentage of the nominal or face value of the share, say 300% of the nominal value of the share, which was the subject matter of the above sited advertisement.

Dividend Yield:

The quantum of dividend expressed in various ways is of little significance to the investor unless it is translated into a relationship to the price paid or amounted invested.

Let us examine the dividends paid by two companies, NMDC Ltd.  The following data is extracted from the website of the popular financial newspaper, ‘The Economic Times’:

The face value of NMDC’s share is Rs.1, which means that the company paid Rs.1.50 and Rs.9.50 per share to shareholders on the two occasions for the financial year 2015-16.

The current market price of the share is Rs.100 on 29^th July 2016 and therefore the website shows the dividend yield of 11%. The yield has been obtained by applying the formula:

Dividend Yield = (Total Dividend Received ÷ CMP) × 100

(Rs.11 ÷ 100) × 100 = 11%

The website calculated the yield based on the current market price of the share as the site is not an investor, does not hold shares, does not have a cost of investment, therefore.

However, an actual investor has a cost of investment, being the price paid while purchasing the share. Suppose an investor had actually purchased NMDC shares at say at Rs.83 apiece, the dividend yield is:

Dividend Yield = (Total Dividend Received ÷ Cost of Investment) × 100

(Rs.11 ÷ 83) × 100 = 13.25%

When different numbers of shares were purchased at different prices, then we take the weighted average holding cost as the cost of investment for calculating the cost of investment. Let us assume that an individual had purchased 100 shares at a price of Rs.126 and another 200 at Rs.100, the weighted average cost of investment will be:

Purchase 1	100	126	12,600
Purchase 2	200	100	20,000
Total	300		32,600

Weighted Average Cost of Investment = 32,600 ÷ 300 = 108.67

The Dividend Yield for this investor will be:

(Rs.11 ÷ 108.67) × 100 = 10.12%

Thus, ‘Dividend Yield’ is a very important metric with which an investor is able to measure the return on his investment from a particular stock or scrip.