PEGY Ratio Calculator

Current Stock Price & EPS

These are straightforward—check any financial website like Yahoo Finance, Google Finance, or your brokerage. Use the current market price and the trailing twelve months (TTM) EPS.

Pro tip: Make sure you're using diluted EPS, not basic EPS, for a more conservative valuation.

Expected Annual Growth Rate

Look at analyst consensus estimates for future EPS growth. I typically use a 3-5 year forward estimate. You can find this on Yahoo Finance under "Analysis" or on Seeking Alpha.

Pro tip: Cross-reference analyst estimates with historical growth rates. If analysts project 25% growth but the company has historically grown at 8%, be skeptical and use a more conservative number.

Annual Dividend Yield

This is the easiest input! Every financial website displays the current dividend yield prominently. It's calculated as: (Annual Dividend Per Share / Current Stock Price) × 100.

Pro tip: Check the dividend payment history to ensure it's sustainable. A 10% yield might look attractive, but if the company just cut the dividend by 50%, that's a red flag. Look for consistent or growing dividends over time.

P/E Ratio (Optional)

The calculator will auto-calculate this by dividing price by EPS, but you can input it manually if you prefer. Use the trailing P/E ratio for consistency.

Pro tip: Compare the current P/E to the stock's 5-year average P/E. If it's trading well below its historical average AND has a low PEGY, that's a double signal of potential undervaluation.

Q: What's the ideal PEGY ratio to look for?

Just like PEG, a PEGY ratio below 1.0 suggests potential undervaluation. I personally look for PEGY ratios between 0.7 and 1.0—low enough to indicate value, but not so low that it raises red flags about the company's prospects. A PEGY of 0.5 might mean the market knows something you don't.

Q: Should I use PEGY for stocks that don't pay dividends?

No, stick with the standard PEG ratio. If the dividend yield is zero, PEGY equals PEG anyway—you're just adding zero to the denominator. PEGY is specifically designed for dividend-paying stocks. For growth stocks that reinvest all profits, the regular PEG ratio is more appropriate.

Q: How do I know if a dividend is sustainable?

Great question! Check the payout ratio (dividends / earnings). If it's above 80%, the dividend might be at risk. Also look at dividend history—has the company maintained or grown the dividend for at least 5 years? And check free cash flow—dividends should be covered by actual cash generation, not just accounting earnings. A high PEGY ratio means nothing if the dividend gets cut next quarter.

Q: Can I use PEGY for REITs and utilities?

Absolutely! In fact, PEGY is perfect for REITs and utilities because they typically have high dividend yields (often 4-8%) but moderate growth rates (3-6%). The standard PEG ratio makes them look expensive, but PEGY reveals their true value by accounting for those substantial dividend payments. Just remember that REITs are legally required to pay out 90% of income, so factor that into your sustainability analysis.

Q: What if the dividend yield is higher than the growth rate?

This is common with mature, slow-growth companies—think utilities, tobacco companies, or established REITs. A stock might grow at 3% but yield 6%. That's fine! The PEGY formula handles this perfectly. You're getting 9% total return potential (3% growth + 6% dividend), and PEGY will reflect that. Just make sure the high yield isn't a warning sign of dividend cuts ahead.

Q: How does PEGY compare to dividend discount models (DDM)?

They're complementary tools. DDM values a stock based solely on future dividend payments, while PEGY considers both growth and dividends in a simpler framework. I use PEGY for quick screening and comparison, then validate my top picks with DDM for a more detailed analysis. PEGY is faster; DDM is more comprehensive.

Q: Should I use forward or trailing P/E for PEGY?

I prefer trailing P/E for consistency with the trailing dividend yield. However, if you're using forward earnings estimates for the growth rate, it makes sense to use forward P/E as well. The key is consistency—don't mix trailing and forward metrics. Pick one approach and stick with it across all your calculations.

Q: What if a company is growing dividends faster than earnings?

This is a red flag! If dividends are growing at 10% but earnings are only growing at 5%, the payout ratio is increasing. This is unsustainable long-term. Eventually, the company will have to cut the dividend or earnings will have to catch up. Be cautious with these situations—the current PEGY might look attractive, but the dividend might not last.

Q: Can I use PEGY for international stocks?

Yes, but be aware of tax implications. Some countries withhold taxes on dividends paid to foreign investors (typically 15-30%). Your actual dividend yield might be lower than the stated yield. Also, make sure you're using consistent currency for all inputs. And remember that accounting standards vary by country, so P/E ratios might not be directly comparable across borders.

Q: How often should I recalculate PEGY?

Recalculate quarterly when new earnings are released and whenever there's a dividend change (increase, decrease, or initiation). The stock price changes daily, but that's just noise. What matters is whether the fundamentals—earnings, growth prospects, and dividend policy—have changed. I set calendar reminders for earnings dates and review my PEGY calculations then.