How to Annualize Dividends
When an investor annualizes dividends, he is calculating the annualized dividend yield. The annualized dividend yield takes into account all dividend payments during the time the share was held by the investor. The annualized dividend yield is calculated based on a single share. The calculation is relatively simple with the use of a calculator. A spreadsheet may come in handy for shares that have been held for long periods.
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Instructions
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1
Add up all of the dividends paid out per share so far. So, if a single share has paid out $3 in the first year, $2 in the second year, $0 in the third year and $4 in the fourth year, the total paid out on the single share would be $9 over four years.
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2
Multiply the number of years the share has been held by its share price at the end of the holding period. So, if the price of the share is currently $10, and you have held the share for a total of four years, this value should be equal to 40.
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3
Divide the result you obtained in Step 1 by the result obtained in Step 2. Using the same example, this would give you a result of 0.225.
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4
Multiply by 100 to obtain the annualized dividend yield. Using the same example, this would be equal to 22.5 percent.
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