Indicated Yield
What It Is:
Indicated yield is the dividend yield on a stock if the most recent dividend is annualized.
How It Works/Example:
The formula for indicated yield is:
Indicated Yield = (Most Recent Dividend x Number of Dividend Payments Per Year) / Stock Price
For example, assume a stock's most recent quarterly dividend was $2 and the stock currently trades at $100. The indicated yield is: ($2 x 4) / $100 = 8%.
Why It Matters:
The indicated yield is a way to forecast a stock's annual dividend yield. It is important to keep in mind that the indicated yield is only part of the equation when evaluating possible returns from a stock investment. The other part of the equation is potential stock appreciation or decline. Indicated yield is only a partial measure of return.
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Cached on May 23, 2012, 5:24 pm