Calculating dividend yields is really easy once you understand the formula behind it. In this post we will first show you have to calculate 2 types of dividend yields - the dividend yield and your yield on cost.

## Dividend Yield

You can calculate a dividend yield by using this formula:

**f(annual dividend payment, current stock price) = (x/y)*100 {(R,R) -> (R)}**

For example let's say we are trying to find the dividend yield of ticker TYD (track your dividends). The information we have is:

- Annual Dividend Payment: $4.20
- Stock Price: $100

We would then input this data into our formula: **f(4.20, 100) = (4.20/100)*100** resulting in 4.2%.

## Yield On Cost

You can calculate your yield on cost by using this formula:

**f(annual dividend payment, average buy price) = (x/y)*100 {(R,R) -> (R)}**

For example let's say we are trying to find the dividend yield of ticker TYD (track your dividends). The information we have is:

- Annual Dividend Payment: $4.20
- Buy Price: $25

We would then input this data into our formula: **f(4.20, 25) = (4.20/25)*100** resulting in 16.8%.

## What This Means

With your dividend yield you can now estimate the amount of money you can expect to earn through your dividend stock. You can do this by applying this formula:

**f(dividend yield, current position value) = (x*y) {(R,R) -> (R)}**

For example let's say we are trying to find the annual yield on cost earnings of ticker TYD (track your dividends). The information we have is:

- Annual Cost on Yield: 16.8%
- Position Value: $10000

We would then input this data into our formula: **f(0.168, 10000) = (0.168*10000)** resulting in $1680 in income a year from this position.

If you don’t want to go through the hassle of doing all this math you can also use our system to track your dividend stocks and we will do the heavy lifting for you!

As always - this post is not to be taken as financial advice. Please consult a financial advisor before making any financial decisions.