How to calculate portfolio yield
For each holding: (Annual dividends from this position ÷ Current value of this position) = Position yield
Then weight by portfolio percentage:
Portfolio Yield = Σ (Position Weight × Position Yield)
Example with three positions:
- SCHD: $60,000 (60% of portfolio), 3.8% yield → contribution: 2.28%
- VYM: $25,000 (25% of portfolio), 3.3% yield → contribution: 0.83%
- Realty Income (O): $15,000 (15% of portfolio), 5.5% yield → contribution: 0.83%
Portfolio yield = 2.28% + 0.83% + 0.83% = 3.94%
Using portfolio yield in retirement planning
Portfolio yield is the starting point for the retire-on-dividends calculator. Divide your annual income need by your portfolio yield to find the required portfolio size.
At a 3.94% portfolio yield and a $60,000 annual income target: $60,000 ÷ 0.0394 = $1,523,000 required portfolio.
Portfolio yield vs individual position yield
Looking only at individual position yields can be misleading. A 5% REIT position and a 3% ETF position don't tell you much until you know how large each is relative to your total portfolio.
Portfolio yield gives you the integrated view: this is what the whole system produces, not just one corner of it.
Related terms
- Dividend yield — yield calculated for individual positions
- Safe withdrawal rate — portfolio yield is compared against safe withdrawal percentage
- Retire on dividends calculator — uses portfolio yield as the key input