Dividend yield, yield on cost and cash income

Three useful numbers with different denominators and meanings.

Begin with annual cash per share

An annual dividend figure already includes every regular payment in the year. If a security pays 0.50 each quarter, its annual dividend at that unchanged pace is 2. Multiplying an annual 2 by four again would overstate income.

Two yields, one holding

For 100 shares, an annual dividend of 2 generates 200 gross. At a current share price of 50, current yield is 4%. If the shares originally cost 40, yield on cost is 5%. That historical denominator does not change the cash paid by the issuer or the return available on a new purchase.

Cash income is not total return

The share price can fall by more than the distribution received. Fees and taxes can reduce net proceeds. A high quoted yield can reflect a low share price and says nothing by itself about sustainability. These calculators do not select investments.

Calculate income and both yield definitions, then test a target holding.