Dividend Yield Calculator
Calculate dividend yields, annual income, and long-term projections with dividend growth and reinvestment.
Stock Details
Total investment: £10,000.00
Automatically buy more shares with dividends
Current Dividend Yield
Dividend Income Projection
Share Growth (DRIP)
💡 Dividend Insights
- • Payout ratio below 60%
- • Growing earnings
- • History of consistent payments
- • Strong cash flow
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Start Free →Understanding Dividend Yields
What is Dividend Yield?
Dividend yield is a financial ratio that shows how much a company pays in dividends relative to its stock price. It's calculated as: (Annual Dividend per Share / Share Price) × 100. A 4% yield means you earn £4 per year for every £100 invested.
Dividend Growth Investing
Many investors focus on stocks with growing dividends. A stock with a 3% yield today might yield 6% on your original cost in 10 years if dividends grow 7% annually. This is called "yield on cost" and creates powerful passive income over time.
DRIP (Dividend Reinvestment Plan)
DRIPs automatically use your dividends to buy more shares, creating compound growth. Over 20-30 years, reinvesting dividends can dramatically increase your share count and future income.
UK Dividend Tax
For the 2025/26 tax year:
- • Dividend Allowance: £500 tax-free
- • Basic Rate: 8.75% on dividends above allowance
- • Higher Rate: 33.75%
- • Additional Rate: 39.35%
Tip: Hold dividend stocks in ISAs or SIPPs to avoid tax on dividends.
Top UK Dividend Sectors
- • Utilities: Stable, regulated businesses with consistent dividends
- • REITs: Real estate investment trusts must distribute 90% of income
- • Banks: Historically strong dividends, but can be cut during downturns
- • Consumer Goods: Companies like Unilever with steady cash flows