Gross and after-tax dividend yield on a shareholding.
After-tax yield
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Gross yield
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Net dividend per share
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Annual net income
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Yield is the income a share pays you to hold it
Dividend yield turns a payout into a percentage you can compare across counters. Divide the dividend per share by the share price and you have the gross yield. A share trading at KES 25 that pays KES 2 a year yields 8 percent before tax. The figure matters because it lets you weigh a steady payer on the Nairobi Securities Exchange against, say, a fixed deposit or a Treasury bill, on the same footing. But the gross number flatters reality. The company deducts withholding tax before the cash reaches you, so what you actually bank is the after-tax yield, and that is the headline this calculator leads with.
For a resident shareholder the rate this tool applies to dividends is 5 percent, taken at source by the company. So the KES 2 dividend arrives as KES 1.90, and the 8 percent gross yield becomes roughly 7.6 percent net. That 5 percent is the figure the calculator uses and it has held fairly steady, but dividend taxation in Kenya is set by Finance Acts that change, so treat it as the modelled rate and confirm the current one with the Kenya Revenue Authority before you build a decision on it.
Working a KES 25 share paying KES 2
Take 5,000 shares bought at KES 25 each, with a declared dividend of KES 2 per share. Using the 5 percent resident rate this calculator models, here is the path from gross yield to the cash that lands in your account over a year.
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The chart sets the gross yield against the after-tax yield. The gap, narrow as it looks, is the withholding tax quietly trimming every payout.
A quiet advantage: NSE shares and capital gains
Income investors on the Nairobi exchange get a second benefit that this yield tool does not show directly but that shapes total return. Gains on the sale of securities listed on the NSE are exempt from capital gains tax, unlike land or unquoted shares, where the rate this site models elsewhere is 15 percent on the net gain. So when you eventually sell a listed holding at a profit, that profit is not chased by CGT. Combined with the dividend being a final 5 percent for residents, listed equity income is taxed lightly relative to many other assets. This is the modelled position, and exemptions can be revisited in a Finance Act, so verify it with the KRA if a large disposal is on the horizon.
Reinvesting, and the yield trap to watch
The net income figure is also your reinvestment fuel. Banking KES 9,500 a year and ploughing it back buys more shares, which pay their own dividends, and the effect compounds. Over a decade a 7.6 percent net yield reinvested meaningfully outpaces the same yield spent. This calculator gives you the annual net figure to feed into that plan.
The trap that catches new income investors is chasing the highest headline yield. A yield can spike simply because the share price has collapsed, not because the company is generous. If a counter shows 15 percent while its peers sit near 6, ask why the price fell before celebrating the number. A sustainable 7 percent from a profitable company beats a fragile 15 percent that may be cut next year. Pair this tool with a look at whether the dividend is actually covered by earnings.
Who this calculator is built for
It suits anyone living off, or building, dividend income: retirees drawing from a portfolio, savers comparing equities with deposits, and investors screening NSE counters before buying. Enter the live price rather than your purchase price if you want the current market yield, or your own cost if you want the yield on what you originally paid, since the two can differ sharply once a share has run up or fallen.
Should I use the price I paid or today's price?
Both are valid, and they answer different questions. Today's market price gives the yield a fresh buyer would get and is the right number for comparing counters now. Your original purchase price gives your personal yield on cost, which shows how well the holding has rewarded you over time. A share bought cheap years ago can show a yield on cost far above its current market yield. This tool computes whichever price you type in.
Why is my after-tax yield only slightly below the gross yield?
Because the resident withholding rate this calculator applies is just 5 percent, it shaves only a twentieth off each payout. An 8 percent gross yield drops to about 7.6 percent, not to something dramatically lower. The deduction is real and worth modelling, but for residents it is light compared with how other income is taxed, which is part of why dividend shares appeal to income investors.