Why use this calculator
Headline dividend yield is close to useless in Australia, because it ignores the imputation system. A fully franked dividend arrives with a credit for company tax already paid, and that credit is worth real money: it either reduces the tax you owe or comes back as cash.
Two shares quoting the same yield can deliver materially different amounts to a retiree and to a high earner, and no yield table anywhere shows that. This calculator adds the franking credit, grosses the dividend up the way the tax return does, then applies the actual resident rates and the Medicare levy to the income you really have, rather than a rate you guess at.
The output is the number that matters, which is the cash you keep and the yield that cash represents on the money you invested.
How to use it
- Enter the current share price from your broker rather than the price you paid, because yield is always measured against today's price.
- Add the interim and final dividends per share from the company's announcements to get the annual dividend per share, and take your holding from the registry statement.
- The franking percentage is printed on every dividend statement, and most large Australian listed companies frank at 100 per cent.
- Choose the company tax rate the franking was calculated at, which is 30 per cent for most listed companies and 25 per cent for smaller base rate entities.
- Enter your other taxable income for the year, from your payslips or last return, so the calculator can find your true marginal rate.
- Finally, say whether you carry a study loan, since grossed-up dividends raise repayment income.
What each result means
- Dividend yield
- Cash dividends as a percentage of today's share price. It falls when the price rises, which is why a very high yield often signals a falling price.
- Grossed-up yield
- Yield including the franking credit. This is the figure Australian income funds advertise and it is not comparable with an overseas yield.
- Annual dividend income
- The cash paid to you across the year, before tax and before any dividend reinvestment plan is applied.
- Monthly equivalent
- The annual income divided by twelve. Australian companies usually pay twice a year, so treat this as an average rather than a payment.
- Franking credits
- Company tax already paid on the profit behind your dividend. It is a real asset at tax time, either reducing tax owed or refunded as cash.
- Grossed-up dividend
- The amount the tax return actually adds to your income, being the cash dividend plus the franking credit attached to it.
- Tax on the grossed-up dividend
- The extra income tax and Medicare levy this dividend causes, calculated on top of your other income rather than at a flat guess.
- Net franking benefit
- The franking credit less the tax. Positive means a refund, negative means the credit covered only part of the bill and you owe the rest.
- Extra study loan repayment
- The increase in your compulsory study loan repayment caused by the grossed-up dividend raising your repayment income.
- After-tax income from the dividend
- The cash you genuinely keep once tax, the levy and any study loan repayment are settled. This is the number to plan around.
- After-tax yield
- After-tax income as a percentage of what the shares are worth today, which is the only fair comparison with a term deposit rate.
- Portfolio value
- Current market value of the holding, used as the denominator for every yield figure shown.
- Marginal rate on this income
- The rate applying to your next dollar once the grossed-up dividend is included, plus the Medicare levy where it applies.
The formula
Dividend yield = annual dividend per share in dollars divided by the current share price in dollars, times 100
Annual income in dollars = dividend per share multiplied by the number of shares
Franking credit in dollars = annual income multiplied by the franking percentage divided by 100, multiplied by the company tax rate divided by one minus the company tax rate, which is 30 divided by 70 at the standard 2026-27 company rate
Grossed-up dividend = annual income plus franking credit
Tax on the dividend = total income tax, less the low income tax offset, plus the Medicare levy at 2 per cent, calculated on your other income plus the grossed-up dividend, minus the same calculation on your other income alone
Net franking benefit = franking credit minus that tax
How this number is used in practice
Imputation is the reason Australian retirees hold so many bank and mining shares. A fully franked dividend carries a credit equal to the company tax already paid, so a shareholder whose own rate is below the company rate is over-taxed and receives the difference back.
For someone in pension phase paying no tax, a fully franked five per cent yield is worth roughly seven per cent grossed up, which no term deposit has matched. For a high earner on the top rate, the same dividend leaves tax still to pay.
The share is identical; the outcome is not, and the gap is entirely a function of who owns it and in what structure.
The trap on the other side is chasing yield. A yield figure rises when the price falls, so the highest yielding stock on the market is frequently a company the market expects to cut its dividend. Sustainable payout ratios, earnings cover and a history of maintaining the dividend through a downturn matter far more than an extra half a per cent on the headline.
Franking credits also depend on the company having Australian tax paid to distribute: a business with large offshore earnings can pay a healthy dividend with little or no franking, and international ETFs carry none at all, which is why comparing an Australian gross yield with a global fund's yield is misleading.
Two practical rules for tax time. The forty-five day holding rule means shares generally must be held at risk for at least forty-five days, not counting the purchase and sale days, before franking credits can be claimed, which blocks buying purely to capture a dividend.
And dividends reinvested through a dividend reinvestment plan are still taxable income in the year they are declared, even though no cash arrives, so the tax has to be funded from somewhere else.
Worked examples
1,000 shares at $45 paying $2.50 fully franked, held by someone earning $90,000 in salary
5.56 per cent yield, $2,500 of cash dividends, $1,071.43 of franking credits and $1,142.86 of tax, leaving $2,428.57 after tax
The identical holding owned by a retiree with $18,000 of other income
The same $2,500 of dividends, but the franking credit exceeds the tax and $1,071.43 comes back as a cash refund
An unfranked dividend, such as an international ETF distribution, on the same holding at a $90,000 salary
The same 5.56 per cent headline yield but no credits at all, so $2,500 becomes $1,675.00 after tax
When people use it
- Comparing two dividend shares on after-tax income rather than headline yield
- Estimating the franking credit refund to expect at tax time
- Planning retirement income from an Australian share portfolio
- Deciding whether a franked dividend beats a term deposit at your marginal rate
- Checking how an unfranked international distribution compares with a franked local one
- Working out how much of a dividend to set aside for tax rather than spend
Tips
- Always compare after-tax yield, not headline yield. Two shares quoting five per cent can deliver very different cash depending on franking and your rate.
- Check the franking percentage on each dividend statement. Companies with large offshore earnings often frank only partially.
- An unusually high yield usually means the price has fallen. Look at the payout ratio and earnings cover before treating it as a bargain.
- Hold shares for more than forty-five days at risk, excluding the buy and sell days, or the franking credits cannot be claimed.
- Dividends taken as shares under a reinvestment plan are still taxable in the year they are declared, so budget the tax separately.
- Keep every dividend statement. The franking credit total is what you enter at tax time, and the registry does not always supply a yearly summary.
- International shares and ETFs carry no franking credits, so an Australian gross yield is not comparable with a global fund's yield.
What it assumes, and where it stops being accurate
- Assumes the dividend per share continues unchanged for a full year. Dividends are declared each half and can be cut, deferred or raised at any time.
- Assumes you are an Australian resident individual taxed at resident rates for 2026-27. Company, trust and self-managed super fund holdings are taxed differently.
- Excludes capital gains and losses entirely. Total return is dividends plus price movement, and the price movement is usually the larger part.
- Excludes brokerage, the Medicare levy surcharge, private health rebate effects and any other tax offsets you may be entitled to.
- Assumes the forty-five day holding rule is satisfied and you are entitled to the franking credits shown.
- The low income tax offset is applied, but the calculator does not model the seniors and pensioners tax offset, which can further reduce tax for older Australians.
Terms used on this page
- Franking credit
- A credit for Australian company tax already paid, attached to a dividend and claimable on your tax return.
- Grossing up
- Adding the franking credit to the cash dividend to get the amount actually included in your taxable income.
- Payout ratio
- The share of company earnings paid out as dividends, a rough test of whether the dividend is sustainable.
- Dividend reinvestment plan
- An option to receive new shares instead of cash, often at a small discount, while the dividend remains taxable.
- Imputation
- The Australian system that credits shareholders for company tax so the same profit is not taxed twice.
Questions people ask
- What exactly is a franking credit?
- It is a credit for company tax already paid on the profits behind your dividend. Australia's imputation system avoids taxing the same profit twice, so the credit is added to your income and then subtracted from your tax. If your own rate is lower than the company rate, the excess is paid to you as cash.
- Can I really receive a cash refund from franking credits?
- Yes. Australia refunds excess imputation credits to resident individuals and superannuation funds. Someone whose marginal rate is below the company tax rate, including retirees paying no tax, receives the difference as an actual cash payment after lodging a return, not merely a reduction in tax owed.
- How do I know whether a dividend is franked?
- Every dividend statement shows the franked and unfranked portions and the franking credit attached. Most large Australian banks, miners and retailers frank fully at 100 per cent. Companies earning significant income offshore frequently frank only part of the dividend because they have less Australian tax to pass on.
- Why does the calculator ask for my other income?
- Because the tax on a dividend depends entirely on the income it sits on top of. A dividend can also push you into the next bracket, so applying a single flat rate to it is wrong. Entering your salary and other income lets the tool calculate the real extra tax the dividend causes.
- What is the forty-five day holding rule?
- To claim franking credits above a small threshold you generally must hold the shares at risk for at least forty-five days, not counting the day of purchase or the day of sale. It exists to stop investors buying just before a dividend and selling immediately afterwards purely to harvest the credits.
- Do international shares come with franking credits?
- No. Franking is an Australian imputation feature, so shares and exchange traded funds holding overseas companies carry no credits. Foreign withholding tax may apply instead, and a foreign income tax offset can sometimes be claimed, which is a different and usually less generous mechanism.
Use this with
Dividend Yield Calculator answers one part of the question. These pick up where it stops: Franking Credits Calculator, Investment Return Calculator, Capital Gains Tax Calculator and Superannuation Calculator.
Where these figures come from
Figures and rules on this page follow Australian law and ATO guidance.
- ATO: Tax rates for Australian residents. Income tax brackets for 2026-27
- Moneysmart: Investing in shares. ASIC guidance on dividends, yield and franking
- ATO: Study and training loan repayment thresholds and rates. HELP repayment thresholds and the marginal repayment system
Dividend Yield Calculator produces an estimate for general information. It is not financial, tax, medical, legal or engineering advice. read the full disclaimer. Spotted a wrong number? Report it and it gets fixed. The form picks up this calculator and the inputs you used.