What is dividend yield?
In short: dividend yield is a company's dividends per share over the last year divided by its current share price, as a percentage. A $100 share paying $4 a year in dividends yields 4%. Because the price is the denominator, the yield rises when the share price falls.
How is dividend yield calculated?
Dividend yield is calculated by dividing the dividends a company paid per share over the last twelve months by its current share price, and expressing the result as a percentage. A share priced at $50 that paid $2 in dividends yields 4%. Because the share price changes every day, so does the yield.
Dividend yield = annual dividends per share ÷ share price. It usually uses the dividends paid over the last twelve months.
| Company | Dividend yield (4 October 2026) |
|---|---|
| BHP (BHP.AX) | 3.95% |
| Commonwealth Bank (CBA.AX) | 3.33% |
| Wesfarmers (WES.AX) | 2.91% |
Why a high yield can be a warning
A falling share price lifts the yield, so an unusually high yield often means the market expects the dividend to be cut. Check the payout ratio: a company paying out more than it earns cannot keep doing so.
Franking credits
Many ASX companies pay franked dividends, which carry a credit for company tax already paid. The yields above do not include franking; for eligible Australian investors the grossed-up yield is higher. How much that is worth depends on your own tax position.
Where dividend yield misleads
- It is backward-looking. Last year's dividend may not be repeated.
- Special dividends inflate it for a year.
- Miners' dividends swing with commodity prices.
How ShareSift uses it
On ShareSift, a dividend yield above 2% with a payout ratio under 70% earns 5 of 100 points in the ShareSift value score.
Frequently asked questions
What is a good dividend yield?
There is no single right figure. A yield above about 2% with a payout ratio under 70% suggests a dividend the company can afford. A yield far above its sector's usual level is more often a warning — the market expecting a cut — than a bargain, so check why it is high.
Does dividend yield include franking credits?
Usually not. Quoted yields, including ShareSift's, are the cash dividend divided by the price. Franking credits add to the return for eligible Australian investors, so the grossed-up yield is higher; how much they are worth depends on your own tax circumstances.
Sources
- ASIC Moneysmart, Choose your investments — the Australian regulator's guide to assessing investments.
- Company figures: Yahoo Finance via ShareSift, as of 4 October 2026. They change daily.
This information is general in nature and does not take into account your objectives, financial situation or needs. ShareSift is not a financial adviser and does not hold an Australian Financial Services Licence. Companies named are examples of how the measure works, not recommendations. Consider whether any information is appropriate for you and seek independent advice before making an investment decision.