How to Calculate Dividend Income and Yield on Cost
Understand annual dividends, monthly averages and the difference between current yield and yield on cost, with a worked example.
The concept in plain English
The dividend calculator multiplies your shares by an assumed annual dividend per share. It shows annual income, monthly average income and yield at one entered share price. Use current price for current yield or original unit cost for yield on cost; run each scenario separately.
Open Dividend Income PlannerYield can rise because price falls
Dividend yield divides a cash-distribution assumption by a price. A higher yield may therefore reflect a lower share price rather than a stronger business or a larger payout. Verify the annual dividend assumption and distinguish a regular payment from a special distribution. To compare current yield with yield on cost, run the tool once with the current price and once with your purchase cost. Neither percentage is a total-return measure.
Annual income versus monthly average
100 shares, a $50 reference share price and a $2 annual dividend per share. No growth, tax or reinvestment.
Annual income = 100 × $2 = $200. Monthly average = $200 ÷ 12 = $16.67. Yield = $2 ÷ $50 = 4%.
$200 annual income, about $16.67 per month on average and a 4% yield at the entered price.
A monthly average is not a payment schedule. If $50 is your cost, the result is yield on cost; if it is today's price, it is current yield.
Calculation method
Annual income = shares × annual dividend per share. Monthly average = annual income ÷ 12. Yield = annual dividend per share ÷ entered share price. Future income applies the assumed dividend growth rate without reinvestment.
| Input | Purpose |
|---|---|
| Shares | Quantity eligible for the modeled dividend. |
| Dividend per share | Annual cash distribution assumption. |
| Reference share price | Use market price for current yield or purchase cost for yield on cost, one calculation at a time. |
| Dividend growth | Models hypothetical future income. |
Step-by-step workflow
- Enter shares, the assumed annual dividend per share and a reference share price.
- Choose current market price or purchase cost depending on the yield you want to measure.
- Use a hypothetical growth assumption and compare annual income with its monthly average.
Practical benefits
- Translates per-share dividends into portfolio income.
- Measures yield against your chosen reference price.
- Supports income-planning scenarios.
Questions about Dividend Income Planner
What is yield on cost?
Yield on cost is current annual dividend income divided by the original cost of the position. It differs from current market yield.
Is a higher dividend yield always better?
No. A high yield can reflect a falling share price or an unsustainable distribution. Cash flow and payout quality still require analysis.
Does the projection include reinvestment?
No. The growth projection changes dividend per share but does not automatically buy additional shares.
Examples are hypothetical and exclude costs unless stated. This is educational material, not individualized investment or tax advice. Read our methodology and risk disclosure.