Net Dividend Yield
Net Dividend Yield is the dividend yield calculated after withholding tax and your account type’s tax treatment — what you actually receive, not what the dividend page advertises. A 5% yielding US stock held in a TFSA delivers a net yield closer to 4.25% after the 15% CRA-mandated withholding tax, which cannot be recovered inside a TFSA. Net Dividend Yield is the number that matters when comparing holdings across account types.
How Prospyr uses it
The Dividend Calculator displays Net Dividend Yield alongside gross yield for every holding, factoring in account type (TFSA, RRSP, non-registered), dividend type (eligible Canadian, non-eligible, or foreign), and applicable withholding tax. This makes direct comparison between a Canadian eligible dividend and a US dividend holding possible on equal terms. Gross yield is the marketing number. Net Dividend Yield is the planning number. Prospyr treats them as separate outputs rather than collapsing them into a single figure.
Why this matters for Canadian investors
The gap between gross and net yield is largest for Canadian investors holding US or international dividend stocks in a TFSA. The US–Canada tax treaty waives withholding tax on US dividends held in an RRSP, but not in a TFSA. A 4% US dividend inside a TFSA nets approximately 3.4% after the 15% withholding — a 60 basis point drag that compounds significantly over time. Knowing your Net Dividend Yield by account type is the first step in placing each holding where it generates the most income.