Dividend investing is a popular way to earn regular income from Indian equities alongside long-term capital appreciation. Use our free Dividend Yield Calculator India to compute current yield, yield on cost, annual income, and TDS. Part of our Complete Salary & Tax Guide for India.
What Is Dividend Yield?
Dividend yield measures how much a company pays in dividends relative to its current share price. It tells you what percentage return you earn from dividends alone — separate from price appreciation. A stock trading at ₹400 with ₹20 annual dividend per share has a 5% dividend yield.
Current Yield vs Yield on Cost
Current yield uses today's market price — useful when screening new stocks. Yield on cost uses your purchase price — more meaningful for long-term holders. If you bought a stock at ₹200 and it now pays ₹20/year, your yield on cost is 10% even if the current yield is only 5% at ₹400 CMP.
Dividend Income and TDS in India
Since FY 2020-21, dividend income is taxable in the hands of the investor at your applicable slab rate. Companies deduct 10% TDS when annual dividend from a single company exceeds ₹5,000. You can claim credit for TDS deducted when filing your ITR. NRIs are subject to 20% TDS under Section 195.
Dividend Income vs FD Returns
Many dividend investors compare stock income against fixed deposits. A 7% FD on ₹10 lakh earns ₹70,000/year with guaranteed principal. Dividend stocks may offer higher yields but carry market risk and no principal guarantee. Our calculator benchmarks dividend income against a 7% FD rate. Compare with our FD Calculator and read the FD vs SIP comparison.
Portfolio Mode — Multiple Holdings
If you hold dividend stocks across multiple companies, portfolio mode calculates weighted average yield, total annual income, and combined TDS. This is especially useful for retirees building a dividend income stream from PSU banks, ITC, Coal India, and other consistent payers.
Dividend Yield vs SIP and SWP
Dividend stocks provide income without selling shares. For mutual fund investors, systematic plans offer alternatives: SIP Calculator for building corpus, and SWP Calculator for regular withdrawals from mutual funds. Each approach has different tax treatment and risk profiles.
Frequently Asked Questions
How is dividend yield calculated?
Dividend Yield = (Annual Dividend Per Share ÷ Current Market Price) × 100. For example, if a stock pays ₹20 annual dividend and trades at ₹400, the yield is 5%. Yield on Cost uses your purchase price instead — if you bought at ₹200, your personal yield on cost is 10%.
Is dividend income taxable in India?
Yes — dividend income is fully taxable as Income from Other Sources at your applicable income tax slab rate. Companies deduct 10% TDS if the total dividend paid to you from a single company exceeds ₹5,000 in a financial year. NRIs face 20% TDS.
What is a good dividend yield for Indian stocks?
A yield of 2-4% is considered healthy for Indian blue-chip stocks. PSU companies often offer 5-8%. Above 8% may be a warning sign — a very high yield can mean the stock price has fallen due to business problems.
What is the difference between dividend yield and dividend payout ratio?
Dividend yield compares the dividend to the stock price — useful for investors evaluating income return. Dividend payout ratio compares dividends to the company's earnings — useful for assessing sustainability.