How Much do You Need to Invest for £1,000 Annual Dividend?

Dividend investing can be beneficial for those interested in earning a cash or stock lump sum each year from their investments, often fixed regardless of the performance of the company shares on the stock market.

For example, these companies could pay a £1,000 dividend if you have enough investment value to achieve it based on their dividend percentages.

Compare investment accounts

Name	Dividend Yield	Investment Deposit Needed for £1,000
James Latham (AIM:LTHM)	6.03%	£16,584
Impax Asset Management Group (AIM:IPX)	7.17%	£13,950
Big Yellow Group (LSE:BYG)	3.65%	£27,400
4imprint Group (LSE:FOUR)	3.06%	£32,700
Burberry Group (LSE:BRBY)	9.09%	£11,002
Dunelm Group (LSE:DNLM)	6.41%	£15,600.62
DCC (LSE:DCC)	3.71%	£26,954.17
NWF Group (AIM:NWF)	4.76%	£21,800.40
Pets at Home Group (LSE:PETS)	4.31%	£23,201.86
Grafton Group (LSE:GFTU)	3.46%	£28,901.73

Updated on 08/01/2025

How to calculate dividend yield

Calculating dividend yield is simple, just follow this simple formula:

Investment = Dividend Income / Dividend Yield
​

Insert the figures into the equation to get an accurate idea of what investment value is required to give you a dividend yield of £1,000 per annum.

For example;

Investment = 1,000 / 3.48% = £28,735.63
​

Using this calculation, you can see how much you would need to invest in any single given stock or share to earn a £1,000 annual dividend return.

Remember, when using percentages in calculations you’ll need to input the number as a decimal, 3.48% becomes; 0.0348.

Is dividend investing worth it?

You can see from our examples above that, you’ll need to have a lot of spare cash to invest in dividend stocks to earn even £1,000 per annum in dividends.

Plus, whether or not a company decides to pay a dividend each year depends on the type of dividend investment scheme the company follows.

Types of Dividend Scheme

Here are the different types of dividend schemes companies might use. Check your potential investments carefully because some policies differ in how and when dividend investments are paid.

Residual

Residual dividend schemes tend to make dividends available out of profits and revenue generated in the financial year that isn’t being reinvested in future projects.

Dividend payments where a residual policy is in place can be sporadic and inconsistent because a company might decide the money would be better spent on investing in the future growth of the business.

So they might cut or stop dividends even if a company has performed very well financially.

Plus, they are much less likely to pay a dividend if a company has performed below financial targets or failed to make profits.

Stable

Stable dividend policies are much more secure.

Dividend payments tend to be calculated based on the long term forecasted performance of the company and are paid at the same level each year, whether or not the company has performed well financially.

Stable dividend policies aim to offer an attractive investment incentive to investors because they know they’re guaranteed to get a cash value percentage back on their investment balance each year while allowing for capital growth if the company performs well and share prices increase.

Your investment will always carry risk, if the company fails and becomes insolvent you have the potential to lose your money and not get a dividend.

However, in times of economic downturn, when the value of markets tends to decline, you could be better off investing in a stable dividend investment which pays you cash income regardless of the behaviour of the markets.

Hybrid

Hybrid policies are common and based on a combination of both residual and stable methods.

With a hybrid approach to dividends, you’re likely to get a small dividend based on past and forecasted performance of the business, then also receive a larger or “bonus” style dividend if the company’s financial performance beats the projections in the financial period which includes your investment.

This is a good option if you believe the share price of the company is likely to increase in value and can achieve strong financial performance because you could benefit from the value of your shares increasing and hefty, bonuses on dividend payments.

Dividend Cuts

Companies can always decide to cut dividend rates or not pay them entirely, based on a range of factors and for numerous causes.

These can include;

• risk to the future of the company, in case of financial instability
• economic downturn
• missed targets
• threats to the health of the company

It is worth researching your investments thoroughly, especially if you will be relying on your income from dividend investments to help you pay for anything essential throughout the year.