Dividend Calculator

Dividends are among the most important factors to consider when deciding which stocks to invest in. You can use a dividend calculator to find out exactly how much you’ll get in dividend payments when you invest in a stock.

Dividend calculators, such as the one offered by Calcopolis, allow investors to automate dividend yield and dividend per share calculations. This makes it much easier to determine the dividend payout.

Read on to learn more about dividends, as well as what to keep in mind when choosing a company to invest in for a high dividend return.

What Is a Dividend?

A dividend is a portion of a company’s income that it pays out to shareholders each period. This period may be a quarter, half, or full fiscal year.

The frequency with which dividends are paid out is determined by the company’s board of directors. The same applies to the dividend amount.

There are several types of dividends, which we’ll outline later in this guide.

How to Calculate the Dividend Payout

To calculate a stock’s dividend payout, you need to know its dividend yield.

This metric measures the dividend amount paid to a stockholder per year as a percentage of the stock’s current price.

It’s calculated using the following formula:

Dividend Yield = Annual Dividends Per Share / Current Share Price

To find the current share price, look up the stock on any finance website using its designated code.

As for the annual dividend per share, it involves a relatively more complex calculation. The figure you calculate represents the dividend amount you get for every share you own in a company.

Here’s how you calculate it:

DPS = Dividends / No. of Shares

Let’s consider an example to make it clearer.

Let’s assume that you own shares in a company that has paid out $60,000 in dividends over the past fiscal year. If the company has 2,000 outstanding shares, then the dividend per share will be $30

This means that if you own ten shares, you’ll get $300 in dividends.

If the math doesn’t agree with you, you can make your life easier and use the dividend yield calculator offered by Calcopolis.

How to Choose Dividend Stocks

If your priority when investing is putting your money in stocks that pay high dividends, there are some considerations to keep in mind:

Go With Consistent Profitability

When deciding on the companies to invest in to maximize your dividend payout, the consistency of each company’s profitability is a major factor to consider.

Many investors make the mistake of pulling the trigger on a stock after the company has a great quarter and pays out high dividends. You should examine if the company has been consistently performing at a high level before investing your hard-earned money in it.

Avoid Companies With Heavy Debt

Another factor that should inform your decision is the level of debt a company has.

Companies with high debt-to-equity ratios typically don’t pay high dividends.

Take a Close Look at the Industry

It’s also important not to look at companies for potential investments in a vacuum. Every company operates in an industry where there are factors beyond its control that have huge effects on its profitability and, in turn, its ability to pay dividends.

Therefore, you should account for industry trends when deciding if investing in it is a good idea.

How Much Do I Need to Invest For Living From Dividends

Based on the assumption of a 4% dividend yield and a median household income of $67,500 in the United States, you’d need to invest around $1.7 million to earn enough dividends for a comfortable life.

This figure is calculated by dividing the required income by the assumed dividend yield.

Types of Dividends

There are several types of dividends paid out by companies. The main three types are cash, property, and stock dividends.

Cash dividends are the most commonly used.

Property dividends are when a company pays out dividends in the form of assets, such as vehicles or inventory.

Stock dividends involve each stockholder getting additional shares depending on the number of shares already owned.

Other types include scrip dividends and liquidating dividends.

Conclusion

When you invest in a stock, you want to know how much you’ll get back in dividend payments each year.

Using the Calcopolis dividend calculator is a fast and convenient way to figure out how much you can expect in dividends when you invest in a given stock.

Authors

Created by Lucas Krysiak on 2023-04-21 13:11:35 | Last review by Mike Kozminsky on 2023-04-21 14:16:41