Dividend Yield Calculator: Evaluate Stocks for Passive Income
The Formula That Reveals Income Potential
Dividend Yield = (Annual Dividend Per Share / Current Market Price) × 100
A stock trading at ₹200 that pays ₹10 annual dividend has a 5% yield. But dividend yield alone doesn’t tell the full story — a high yield might indicate a falling stock price rather than generous dividends.
What’s a Good Dividend Yield?
| Yield Range | Interpretation | Typical Stocks |
|---|---|---|
| 0–1% | Growth-oriented, reinvesting profits | IT, FMCG, pharma |
| 1–3% | Moderate dividend | Large-cap banks, industrials |
| 3–6% | High dividend yield | PSU stocks, mature businesses |
| Above 6% | Unusually high — check if sustainable | May indicate distress |
Taxation of Dividends in India
Since FY 2020-21, dividends are taxable in the hands of the recipient at slab rates. For someone in the 30% bracket, a 5% dividend yield gives only ~3.4% after tax — barely better than a savings account. TDS of 10% is deducted if annual dividends from a company exceed ₹5,000. Factor in tax impact using the dividend yield calculator and compare after-tax yields with FD returns.