Gross Dividend Yield: Meaning and Example

The gross dividend yield is the dividend yield on a stock before taxes, withholding, fees, or other deductions are taken out.

It shows the raw income yield relative to the stock’s price, but it does not tell investors what they actually keep.

How It Works

A simple form is:

annual dividends per share / current share price

Calling it gross emphasizes that the yield is measured before tax effects are considered.

Worked Example

Suppose a stock pays $3.00 per share annually and trades at $60.

Its gross dividend yield is:

$3.00 / $60 = 5%

If dividend taxes reduce the investor’s take-home income, the after-tax yield will be lower than 5%.

Scenario Question

An investor says, “A 5% gross dividend yield means I will always keep 5% in income.”

Answer: No. Taxes, withholding, and other frictions can reduce the net yield.

Related Terms

• Dividend Yield: Gross dividend yield is one way of expressing dividend yield before deductions.
• Forward Dividend Yield: Forward yield uses expected future dividends instead of current or trailing dividends.
• After-Tax Yield: After-tax yield shows what remains after taxes.
• Dividend Payout Ratio: Payout ratio helps judge how sustainable the gross yield may be.
• Dividend Growth Rate: Growth in dividends can raise future yield on cost.

FAQs