Dividend yield

Published Wednesday 30 September 2026

Table of contents

• What is dividend yield?
• How to calculate dividend yield
• Dividend yield example
• What dividend yield tells you
• What's a good dividend yield?
• Limitations of dividend yield
• Dividend yield and tax in Singapore
• Track your company's earnings and equity with Xero
• FAQs on dividend yield
• Related terms
• Learn more about dividend yield

Key takeaways

• Dividend yield is a company's annual dividend per share divided by its current share price, shown as a percentage
• A high yield is a prompt to investigate, since a falling share price or borrowing can push it up
• Singapore real estate investment trusts tend to yield more because they must distribute at least 90% of taxable income to get tax transparency treatment
• Dividends from Singapore-resident companies are generally not taxable to shareholders under the one-tier corporate tax system

What is dividend yield?

Dividend yield is the annual dividend a company pays per share, shown as a percentage of its current share price. It's a common way for shareholders to measure the cash return on investment they get from a stock.

Think of it like rent on an investment property: the yield tells you how much cash the asset pays you each year compared with what it costs to buy today. That makes it useful for comparing companies, especially if you want your portfolio to pay you regular income.

Dividend yield and profit are linked, but they measure different things. Profit is what the business earns after its costs, and the company may keep some or all of it. Dividend yield only reflects the part of profit paid out to shareholders.

How to calculate dividend yield

You need two numbers: the annual dividend per share and the current share price. Follow these steps.

1. Add up the dividends the company has paid per share over the past 12 months, or use its declared annual rate
2. Find the current market price of one share
3. Divide the annual dividend per share by the current share price
4. Multiply the result by 100 to get a percentage

Put together, the formula looks like this:

Dividend yield (%) = (annual dividend per share ÷ current share price) × 100

Trailing vs forward dividend yield

The dividend figure you pick in step 1 changes the result, so check which version you're looking at. The Corporate Finance Institute (CFI) guide to forward dividend yield sets out both.

Trailing dividend yield uses the dividends a company actually paid over the past 12 months. Forward dividend yield uses a projection of the coming year's dividends, so it depends on the company keeping up its latest payment.

Dividend yield example

Say a Singapore company pays an annual dividend of S$2 per share, and its shares trade at S$40. Here's the calculation:

(S$2 ÷ S$40) × 100 = 5%

The dividend yield is 5%. If you invested S$1,000 at that price, you'd own 25 shares and receive S$50 a year. That holds as long as the company keeps paying S$2 per share.

What dividend yield tells you

The yield shows the income an investment might generate, but it covers only part of a company's financial health. Pairing it with other measures helps you judge whether the payout is likely to last.

A steady or rising yield, backed by a stable share price, can suggest the company is confident about its future cash flow. When the yield climbs because the share price is falling, the market may expect the business to decline.

The dividend payout ratio adds useful context. CFI defines the payout ratio as the dividends paid to shareholders compared with the company's net profit. A high ratio means the company keeps less money to reinvest, which suits investors who prefer steady cash over share price growth.

Before you rely on a yield, you can check whether:

• the payout ratio leaves room for the company to reinvest
• earnings are stable or growing over several years
• the share price has held steady rather than dropped sharply
• the company has a consistent record of paying dividends

What's a good dividend yield?

A good yield depends on the industry and the type of company. Mature businesses with predictable cash flows often pay higher yields. Fast-growing companies, such as those in technology, tend to reinvest profits to win market share.

Singapore's listed market has been one of the region's higher-yielding markets. FTSE Russell reported that the Straits Times Index (STI) yield rose above 5% in 2023. As of November 2024, its financials and real estate industries yielded 4.9% and 5.5%, against an Asia-Pacific average of 2.5%.

Singapore real estate investment trusts (S-REITs) tend to show higher yields for a structural reason. The Inland Revenue Authority of Singapore (IRAS) sets the rule in its e-Tax Guide on REITs. To get tax transparency treatment, a REIT must distribute at least 90% of its taxable income in the same year. So a yield that looks high for an ordinary company can be normal for an S-REIT.

A financial adviser can help you set target yields for your portfolio, based on your income needs and appetite for risk.

Limitations of dividend yield

The yield measures only the cash a company pays out, so it leaves out other parts of your return. Keep these limits in mind:

• Capital gains are left out, even though rising share prices are often a major source of investor returns
• Yield traps form when a falling share price pushes the yield up while the business declines
• Debt-funded dividends keep yields high for now but add borrowing the company must repay
• Skipped reinvestment can weaken future performance when a company pays dividends instead of investing in growth

Treat the yield as one measure in a broader review of a company. Look at its performance, profitability, liabilities, industry position and growth prospects too.

Dividend yield and tax in Singapore

Dividends paid by Singapore-resident companies are generally not taxable to shareholders. That's because of the one-tier corporate tax system, where the tax a company pays on its profits is final.

The IRAS guidance on taxable dividends, last updated 27 February 2026, lists exceptions such as dividends from co-operatives. REIT distributions are also generally not taxable to individuals. The exceptions are income received through a partnership in Singapore or from carrying on a trade, business or profession in REITs.

Tax rules can change, so check the IRAS website or speak with an accountant about your own situation.

Track your company's earnings and equity with Xero

Dividends come out of your business's profits, so clear numbers help you decide what to pay out and what to reinvest. Xero brings your accounting data into easy-to-read financial reports, so you can track profit and equity in real time.

You can share the same figures with your accountant before you declare a dividend. Try Xero and get one month free.

FAQs on dividend yield

These answers cover common questions about how dividend yield works in practice.

What does a 10% dividend yield mean?

A 10% yield means you'd receive S$10 a year for every S$100 invested at today's share price. A yield that high can signal a falling share price, so check the payout ratio and dividend history before you buy.

Is a higher dividend yield always better?

A higher yield pays you more cash today, but it only helps if the company can keep paying. A moderate yield from a growing, profitable company can deliver more over time through dividend increases and capital gains.

How often does dividend yield change?

The yield moves whenever the share price moves, because the price is the bottom half of the formula. The dividend part changes only when the company announces a new payment, so the two can shift at different times.

Can a company with no profit pay dividends?

In Singapore, dividends generally come only from profits, but a loss-making company can still pay one from retained earnings (earlier years' profits) available to distribute. Paying out more than the business earns in a year is a sign to check whether the dividend can last.

Related terms

• Dividend
• Earnings per share
• Retained earnings
• Equity

Learn more about dividend yield

• Methods for valuing a company
• How to work out what your business is worth
• What owner's equity is and how to calculate it
• Profitability ratios and what they tell you