The formula to calculate Dividend yield – assuming no capital gains – is:
Annual Dividends per Share / Price per Share
It can further be manipulated to compute either Annual Dividends or Price of the share.
We can assume that you know the percentage dividend on your invested stock through the company’s prospectus, which stands at 5%. Moreover you know that the issued price of each stock was $30. Assuming that there were no capital gains, you need to simply multiply the dividend of 5 percent with the price of each stock.
30 x 0.05= $1.5 is your annual dividend per share.
To reverse the procedure, if the company declared annual dividend share of $1.5, you can easily compute that the dividend yield would be 5 percent.
Now you won’t be having just one stock up your sleeves as you would want maximum returns. Assuming that you have 1000 shares of a company, then you will be getting 1.5 x 1000= $1500 in annual dividends.
With most companies paying dividends on a quarterly basis, you need to divide this value by 4 to compute quarterly earnings, which in this case will be $1500/ 4= $375