What is dividend yield?
Dividend yield shows annual dividends relative to the current share price. It is not a guaranteed interest rate.
Dividend yield (%) = annual dividend per share ÷ current share price × 100
A KRW 50,000 share paying KRW 2,000 a year has a yield of 4%.
Definition: FINRA on dividend yield. All calculations below are hypothetical.
Why does dividend yield rise when the price falls?
Keep the annual dividend at KRW 2,000 and reduce only the price. A smaller denominator produces a higher yield.
| Share price · KRW | Dividend · KRW | Yield |
|---|---|---|
| 50,000 | 2,000 | 4.00% |
| 40,000 | 2,000 | 5.00% |
| 30,000 | 2,000 | 6.67% |
Prices in KRW. All bars start at zero.
A higher yield does not necessarily mean a larger dividend. Someone who bought at KRW 50,000 still receives KRW 2,000 per share. The current yield may show 6.67%, but yield on the original cost remains 4%, while the share price has fallen 40%.
Keep the dividend fixed and change the price
Leave the dividend at KRW 2,000 and change the price to KRW 40,000. The yield becomes 5% without any increase in the dividend.
Pre-tax dividend yield:
Amounts are in KRW. Change either input to update the pre-tax dividend yield.
What would a 5% yield pay on KRW 100 million?
Multiply invested capital by the annual yield. KRW 100 million × 5% gives KRW 5 million a year before tax, or about KRW 416,667 a month on average.
| Yield | Annual | Monthly average |
|---|---|---|
| 3% | 3,000,000 | 250,000 |
| 5% | 5,000,000 | 416,667 |
| 7% | 7,000,000 | 583,333 |
| 10% | 10,000,000 | 833,333 |
Assumes the annual yield holds for a full year. Monthly averages divide annual dividends by 12; they are not actual monthly payments.
Calculation assumptions and rounding
The same yield applies to all invested capital. Taxes, trading costs and the number of whole shares you can buy are excluded. All amounts are KRW examples, with no currency conversion or FX changes.
Annual dividends equal capital × annual yield. Monthly averages divide that amount by 12. Cash amounts are rounded to the nearest won, so monthly averages multiplied by 12 may differ slightly from annual totals. The share-price input example rounds yield to two decimal places. Actual dividends depend on the company's payment decisions.
For a Korean-resident individual whose ordinary US corporate dividends qualify for 15% US withholding, KRW 5 million leaves KRW 4.25 million: about KRW 354,167 a month on average. This is not final income after Korean taxes.
When the 15% US withholding example applies
This example assumes a Korean-resident individual receiving ordinary US corporate dividends with treaty benefits. The purchase and receipt exchange rates are identical. Subtracting KRW 750,000 of US withholding from KRW 5 million leaves KRW 4.25 million.
Treaty eligibility, W-8BEN documentation, income classification, Korean taxation and foreign tax credits can change the result. The same rate cannot be assumed for every component of ETF distributions. Confirm actual conditions with your broker or tax adviser.
Sources: US–Korea treaty, Article 12 and IRS treaty benefit guidance.
Use the dividend calculator for your capital, or the monthly dividend goal calculator to estimate required assets. Both tools provide pre-tax results.
Why can high-yield stocks be risky?
A high yield can result from a sharp price decline. If earnings are weakening, the dividend shown may also be at risk. At a KRW 30,000 price, cutting the annual dividend from KRW 2,000 to KRW 1,000 reduces the yield from 6.67% to 3.33%.
Dividends depend on earnings and cash. Lower profits, investment needs or debt repayments can lead a company to reduce dividends. Accounting profits and available cash differ, so check cash flow as well.
In its August 1, 2024 earnings release, Intel announced that it would suspend dividends starting in Q4 2024 to prioritize liquidity and investment. Past dividend payments do not promise the next payment.
How do dividend yield and dividend growth differ?
Yield measures dividends relative to today’s price. Dividend growth measures the change in dividends per share over time.
Suppose hypothetical stocks A and B both trade at KRW 50,000. A keeps its annual dividend at KRW 2,500, giving a 5% yield. B raises its annual dividend from KRW 1,500 last year to KRW 1,650 this year, an increase of 10%, but its current yield is 3.3%. B grew its dividend faster, yet A pays more today.
For actual fund distribution histories alongside current yields, read DGRO vs SCHD dividend growth.
What does dividend yield leave out?
A KRW 2,000 dividend can still leave you KRW 8,000 down
You buy a share for KRW 50,000. A year later it is worth KRW 40,000, and you have collected KRW 2,000 in dividends. Your share and cash now total KRW 42,000. Despite the dividend, you have lost KRW 8,000: a −16% total return.
Total return combines the price change and dividends received. This example excludes reinvestment, taxes and costs.
The payout ratio measures the share of earnings paid as dividends over the same period. KRW 2,000 of dividends against KRW 4,000 of earnings per share gives 50%. It helps assess payment capacity, but zero earnings or losses make it hard to interpret. Industry differences also prevent a universal safe ratio.
Payout ratios and sustainability: Fidelity's dividend stock guide.
Trailing 12 months (TTM) versus Forward yield
TTM divides the past 12 months' dividends per share by the current price. Old payments may keep it elevated after a cut. Forward yield uses expected dividends for the coming 12 months, or an annualized recent regular payment. It is not a promise.
At KRW 50,000, past payments of KRW 2,000 give a 4% TTM yield. If the latest quarterly dividend falls to KRW 250, four such payments imply KRW 1,000 a year and a 2% Forward yield. Check special dividends and the data provider's method. Source: Fidelity's Trailing and Forward definitions.
Stock dividends versus ETF distributions
Companies pay dividends to shareholders. ETF distributions can come from portfolio dividends, interest or realized gains. Some funds also return part of invested capital. A high ETF distribution rate therefore does not establish stronger company earnings or higher total returns. The SEC's fund distribution bulletin explains why investors should also examine total return.
Does a high dividend yield make a good investment?
A stock yielding 5% because dividends grew differs from one yielding 5% because its price collapsed. Look at what produced the number. The same yield means different things depending on whether earnings and cash flow support the dividend.
You may need income to spend today or want dividends to grow for later. The SCHD vs JEPI comparison explores that difference.
Frequently asked questions
Does yield use my purchase price or the current price?
Usually the current price. Yield on your cost divides annual dividends per share by your purchase price per share.
Does a 5% dividend yield mean 5% every month?
No. It is an annual rate. A quarterly dividend pays four times a year, and the payments may differ.
Can I lose capital despite a high dividend yield?
Yes. If the price loss exceeds the dividends received, your overall investment loses money.
Where can I check dividend yield?
Check company dividend announcements and exchange or broker data. For ETFs, review the manager’s distribution history. Check the date, TTM versus Forward basis and treatment of special dividends.