![]() This requires one more step than the above equation, since you’ll be multiplying the current quarterly dividend to reflect how much the annual dividend should be (provided the dividend is neither increased nor decreased.)Ĭurrent dividend yield = (Current dividend X 4)/(Current share price) X 100 By far, dividend yield is used most commonly to refer to current dividend yield. How to calculate dividend yieldĭividend yields will vary depending on which numbers you use to plug into the equation. ![]() Many financial websites that provide information on equities and ETFs will calculate dividend yield and other metrics for you. There's no longer any need to lift a finger and calculate dividend yield yourself. There’s even a term for companies that use high dividend yields to lure investors into buying dud stocks: dividend value traps. In 2018, Ford had a super high dividend yield of almost 7%, but this reflected by the fact that the stock had lost nearly 50% of its value in the prior 5 years. As you can see by fiddling with a chart like this one showing Exxon's historical stock price as it related to the stock's dividend yield, when the stock price goes up, the dividend yield will go down as the dividend represents a smaller percentage of the stock price, and vice versa, how a lowering stock price generally means a higher dividend yield.įor this reason, a stock owner may not be in the mood to celebrate a rising dividend yield. This can make a big difference if a particular stock has experienced any large price swings. As with anywhere else, the financial world is rife with people who argue whether you dip your grilled cheese in toe-may-toe or toe-mah-toe soup! You could encounter a dividend yield that reflects the total dividends paid during the most recent fiscal year, total dividend paid over the past four quarters regardless of the year, or even the most recent dividend multiplied by four to extrapolate future dividends. Without further ado, presenting the ultra-rare financial equation that - it's pretty simple: Dividend yield formulaĭividend yield = Annual Dividend/Share Price X 100ĭividend yield is always expressed as a percentage. Dividend yield is computed by diving the amount a company pays per year by the share price, so for example, if XYZ Corporation pays a $10.00 annual dividend on a $200.00 stock, the dividend yield would be 5%. Invest as little as a dollar and we’ll build you a personalized investment portfolio to grow your wealth.ĭividend yield is a way to make an apples-to-apples comparison of dividends from one stock to another based upon how much the dividend represents as a portion of a stock price. Get $10,000 managed free for a year when you sign up for a new Wealthsimple account. So, it would seem like you’d make a lot more in dividends from Apple, right? But consider this: Ford stock’s been trading at around $10 per share while Apple’s stock trades at over $150 per share so a $150 investment in Apple would get you 73 cents in quarterly dividends but the same dollar amount in Ford stock would net you 208% more - $2.25. For example, Ford Motor Company pays a dividend of around 15 cents per share while Apple pays around 73 cents. ![]() Since dividends are paid to investors on a per share basis, it doesn’t make a whole lot of sense to compare actual dividends to assess whether a company pays a lot back to investors. Invest as little as a dollar and we’ll build you a personalized investment portfolio to meet your financial goals. Grow your money with low fees and no account minimums. Procter & Gamble pays them Google does not. ![]() Dividends, by and large, are more common with older, massive companies. Dividends are a regularly-issued taste of a company’s corporate profits paid on a per-share basis regardless of whether a stock happens to be up or down, though boards of directors may raise or lower them depending on the financial health of the company. What is dividend yield?ĭividend yield is the dividend you earn from owning a companies stock expressed as a percentage of a current share price. Not sure of the difference between a dividend and a dividend yield? No prob! We'll not only set you straight and teach you some math.
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