Gross and after-tax dividend yield on a share.
After-tax yield
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Gross yield
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Withholding rate
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The headline yield on a PSX stock is not the yield you bank
Dividend yield is one of the first numbers income investors look at: the annual dividend per share divided by the share price, shown as a percentage. A PKR 100 share paying PKR 8 a year yields 8%. Clean and simple, until tax enters. In Pakistan the dividend is withheld at source before it reaches you, so the percentage that actually compounds in your pocket is lower than the quoted figure. This calculator shows both, the gross yield the screener reports and the after-tax yield you really earn, and the difference is larger than most investors expect.
The reason to care is comparison. When you stack one income stock against another, or against a savings product, comparing gross yields can mislead you. Two shares can quote the same yield while one delivers more cash to a filer than the other does to a non-filer. The after-tax yield is the honest basis for that comparison.
How your filer status reshapes the percentage
The withholding rate is what drives the gap, and in Pakistan that rate hinges on whether you are on the Active Taxpayer List. As applied by this calculator, a filer faces 15% dividend withholding and a non-filer faces 30%. The Federal Board of Revenue (FBR) sets these rates through each Finance Act, so treat them as the current figures the tool uses and confirm the live rates with the FBR before acting on them.
Run the gap on the default share. A PKR 100 stock paying PKR 8 has a gross yield of 8.00%. For a filer, 15% withholding trims it to an after-tax yield of 6.80%. For a non-filer, 30% withholding cuts it to 5.60%. Same stock, same price, same dividend, yet a non-filer earns 1.20 percentage points less yield simply for being off the list.
| Step | Filer | Non-filer |
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The chart puts the gross yield against the two after-tax outcomes, so the bite that withholding takes is visible immediately.
A neat shortcut, and where it stops working
There is a tidy way to read the result. The after-tax yield is just the gross yield multiplied by the part you keep after withholding. A filer keeps 85% of the gross, so 8.00% becomes 6.80%. A non-filer keeps 70%, so 8.00% becomes 5.60%. That shortcut holds as long as the dividend is taxed as a final withholding, which is the usual case for individual investors on ordinary listed shares.
Where it stops working is with special cases the tool does not model. Dividends from Independent Power Producers carry a reduced rate, and mutual fund payouts can differ, so the keep-rate is not always 85% or 70%. If you hold those, use the dividend tax calculator for the exact withholding before converting to a yield. This page assumes the standard filer and non-filer rates.
A practical tip for income investors
Yield rises when price falls, so a sky-high yield often flags a stock the market has marked down for a reason, not a bargain. Before chasing the biggest number, check whether the dividend is sustainable from earnings and whether the payout has been cut before. Then, and only then, run it through the after-tax filter here. A modest 6.80% after-tax yield from a steady payer usually beats a fragile 10% that gets slashed next year. Use this tool to compare income shares on a like-for-like, post-withholding basis, and pair it with a view on whether the dividend itself will last.
Does a higher share price always mean a lower yield?
For a fixed dividend, yes. Yield is dividend divided by price, so if the dividend per share holds steady and the price climbs, the yield falls. That is why the yield on a stock you already own drifts as the price moves, even when the company has not changed its payout. Enter your own purchase price to see the yield on your actual cost rather than today's market price.
Should I compare dividend yield to bank deposit rates?
You can, but compare after-tax to after-tax. Profit on bank deposits is also withheld, often at its own filer and non-filer rates, so put both on a net basis before deciding. Remember too that a dividend is not contractually guaranteed the way deposit profit is, so a slightly lower but more certain return may suit a conservative income plan better.