How to Calculate Dividend Yield on Non-Annual Dividends
There are essentially two ways that investors can make money from owning stocks. They are share price appreciation and dividends. Dividends are a payment that the board of directors agrees to pay out to shareholders as a share of earnings. Computing the dividend yield consists of dividing the annual dividend paid per share with the price per share. While most dividends are paid on a quarterly or annual basis, some are paid in more or less frequent time intervals.
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Instructions
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Review the calculation for dividend yield. The formula for dividend yield is: "Annual Dividends Per Share" / "Price of Stock Per Share." Find both by either going to investor relations for the company that issued the stock or looking up the information on an investment research site.
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Walk through an example. Let's say you own a stock that pays $1 in dividends every five years with a current stock price of $50 and a stock that pays $1 every quarter but is worth only $5. Compute the difference in dividend yield for both the non-annual and annual paying dividend.
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Calculate the dividend yield for the non-annual paying dividend. While the stock pays a dividend, the company has decided to reinvest dividends into share price appreciation. The dividend yield for the non-annual stock (pays $1 every five years) is $.20 ($1/5) / $50, or .4 percent.
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Calculate the dividend yield for the lower priced stock with a dividend that pays annually. The calculation is $4 ($1 x 4)/$5, or 80 percent.
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