How to Interpret Dividend Yield and Determine Cash Payments
Summary
A stock quote shows a dividend figure and yield, leading an investor to ask whether owning two shares will produce that amount in monthly cash. The response explains that a displayed dividend value can represent different measures, including an annualized recent payment, a trailing twelve-month total, or dividends for a completed fiscal year. Investors must identify the data provider’s definition before estimating income.
Dividend entitlement depends on the ex-dividend date: buyers must own the shares by the preceding trading close to qualify, while the payment generally arrives later. The example identifies a monthly paying real estate investment trust and uses its then-current declared per-share amount to illustrate the cash due on two shares; the larger quote figure reflects an annualized estimate assuming payments stay constant. Payment schedules and amounts can change, and applicable tax rules may affect the net result. The example is historical and should not be treated as a current payment forecast.
Key ideas
- A quote’s dividend field may report an annualized estimate or another historical measure rather than the next cash payment.
- Dividend entitlement depends on holding the shares by the close before the ex-dividend date.
- The payment date usually follows the ex-date, and the interval can vary.
- Estimate a specific payment using the declared per-share amount and eligible share count.
- Annualized figures assume future payments remain unchanged.
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Full text
# dividend cash in month # dividend cash in month I like know how much money dividend cash I get. For example I own two shares of the stock dividend cash will be 4.54$ ? ``` Prev Close: 52.01 Open: 51.85 Bid: 48.28 x 200 Ask: 52.75 x 100 1y Target Est: 49.44 Beta: 0.41 Next Earnings Date: 29-Apr-15O Earnings announcement Day's Range: 51.54 - 52.64 52wk Range: 39.62 - 55.54 Volume: 1,579,416 Avg Vol (3m): 2,294,020 Market Cap: 11.76B P/E (ttm): 50.13 EPS (ttm): 1.04 Div & Yield: 2.27 (4.50%) ``` ## Answer by Richard at NorgateData (score 1, accepted) https://quant.stackexchange.com/a/17044 You are assuming that the Dividend stated in your figures represents how much dividend you will be receiving in a month. However, you need to know exactly what that field represents. It could be one of the following: - Annualised dividend (most recent dividend multiplied by frequency... eg. quarterly dividend multipled by 4) - Annualised declared dividend (most recent declared by not yet entitled/paid dividend multiplied by frequency) - Trailing twelve month dividend (all dividends received in the last 12 months) - Annual dividend - all dividends allocated to the most recent complete fiscal year - Some other derivation (perhaps based the sum of dividends included in quarterly reports) Every dividend declared by the company has one important date - the ex-date. If you have bought on or before the close of the previous trading date then you are entitled to that dividend. If you purchase after the close of the previous trading date (e.g. after-hours trading) or any time on or after the ex-date then you are NOT entitled to that dividend. Note that the date you get paid the dividend is typically a few weeks after the ex-date but this can vary. Note also that you can sell the stock on the ex-date and still receive the dividend. You should be learn which different taxation rules applicable to stock holding periods on dividends. With a bit of sleuthing, I found a stock that matches your data. I assume you are referring to the stock NYSE:O (Realty Income REIT). This company historically pays out dividends on a monthly basis. The most recent dividend declared is 0.1895 with an ex-date of Monday 30 Mar 2015. You need to be holding the stock by the close of Friday 27 Mar 2015. The payment date for the dividend is 15 Apr 2015. In answer to your question, you will receive a dividend for 2 shares * 0.1895 = 0.379 The dividend value 2.27 in your figures appears to represent the annualised dividend of the most recently declared dividend of 0.1895 * 12 and therefore assumes the dividends will remain constant for the next 12 months. A sample of prior dividends for NYSE:O, by ex-date, are: `20150226 0.1890 20150129 0.1890 20141230 0.183417 20141126 0.183104 20141030 0.183104 20140929 0.183104 20140828 0.182792 20140730 0.182792 20140627 0.182792 20140529 0.182479 20140429 0.182479 20140328 0.182479 20140227 0.182167 20140130 0.182167 20141230 0.182167 ` Data for this exercise came from Premium Data. Disclosure: I am a co-owner of Premium Data.
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