The formula to calculate Dividend Yield is:
Dividend Yield = (Annual Dividend per Share / Price per Share) × 100
Example:
If a company pays an annual dividend of $2 per share and the current stock price is $50, then:
Dividend Yield = (2 / 50) × 100 = 4%
This means the dividend yield is 4%, which represents the return on investment from dividends alone.
To understand when you need to buy a stock to receive its dividend on the next payout day, you need to know four important dates:
- Declaration Date: When the company announces the dividend and key dates.
- Ex-Dividend Date: You must own the stock before this date to get the dividend.
- Record Date: The company checks who owns the stock on this date.
- Payment Date: The date the dividend is actually paid to eligible shareholders.
To receive the next dividend payout: You must buy the stock before the ex-dividend date. Buying on or after that date means you'll miss the next payment.
Example Timeline:
- Declaration Date: May 10
- Ex-Dividend Date: May 20
- Record Date: May 21
- Payment Date: June 5
✅ Buy before: May 20 → You get paid on June 5
❌ Buy on/after: May 20 → You miss this payout
