How to Calculate Quarterly Payments Owed on Mutual Fund Dividends

Calculate quarterly earnings on mutual fund dividends to estimate your income.

Mutual funds offer investors an easy and inexpensive way to build a diversified investment portfolio. A mutual fund is created with money from thousands of different investors to form a portfolio of bonds, stocks, real estate and other securities. Most funds require a moderate investment to get started, typically a few hundred to a few thousand dollars. If you are considering investing in a mutual fund, one that invests in dividend-paying stocks will give you more immediate cash returns, as well as potential long-term growth. Many mutual fund dividends are distributed through quarterly payments, which can be calculated easily.

Instructions

1. Find information about the mutual fund that you own or plan to invest in. The Wall Street Journal and Barron's both offer comprehensive lists of existing mutual funds in their print publications and online. Using its stock symbol, look up the most recent data on the fund.

2. Look for the current share price and the dividend yield. Record the number of shares you own from your most recent mutual fund statement or the quantity you hope to buy.

3. Multiply the dividend yield amount by the current share price. The result is the annual dividend per share you can expect to earn. If the current share price is $23.58 per share with a dividend yield of 11 cents, the annual dividend per share will be $2.59.

4. Divide the annual dividend by four. The result is the quarterly dividend per share you can expect to earn. If the annual dividend is $2.59, divide that by four to get 65 cents per share in dividends every quarter.

5. Multiply your total number of shares owned by the estimated quarterly dividend per share. The result is the estimated total quarterly dividend you can expect to earn. If you own 175 shares with a quarterly dividend per share of 65 cents, you can expect to earn a total quarterly dividend of around $113.75.

6. Calculate quarterly payment estimates for a mutual fund in which you want to invest. Use the same steps above to measure the worth of investing in an alternative mutual fund. By calculating the quarterly dividend payments for the fund of interest, you can make an informed decision as to whether the potential earnings will be worth the investment costs.

7. Add together all the estimates of the total quarterly dividends you can expect to earn from each of your investments. The result will be the total quarterly earnings you can expect for your complete investment portfolio.

References

• Mutual Fund Education Alliance: Investment Strategies
• CNN: Investing in Mutual Funds

Resources

• Barron's: Mutual Funds Weekly Listing
• The Wall Street Journal: Closing Prices of Mutual Funds