Forward Dividend Yield Calculator
Project future dividend yields, forward income, and yield on cost over time.
Calculate Forward Dividend Yield
Forward Yield Projection
| Year | Projected Annual Div | Forward Yield at Current Price | Yield on Cost | Your Annual Income |
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Trailing vs. Forward Yield
Projected Annual Dividend Income
Table of Contents
How to Use This Calculator
This calculator projects future dividend yields based on the most recently declared dividend and expected growth rates.
- Enter the current stock price - The current market price per share.
- Enter the most recent quarterly dividend - The last declared dividend per share per quarter.
- Set growth expectations - Enter the expected annual dividend increase and stock price growth.
- Review the projection table - See how your forward yield and yield on cost evolve over 1 to 10 years.
Forward Dividend Yield Formula
Forward Yield = (Recent Quarterly Div x 4) / Current Price x 100
Yield on Cost formula:
Yield on Cost = Current Annual Dividend / Original Purchase Price x 100
Example: A stock at $150 paying $0.50 quarterly with 6% annual dividend growth:
- Current Trailing Yield = ($0.50 x 4) / $150 = 1.33%
- Forward Yield (Year 1) = ($0.53 x 4) / $150 = 1.41%
- Yield on Cost after 5 years = $2.68 / $150 = 1.78%
Understanding Forward Dividend Yield
Forward dividend yield is a forward-looking estimate of a stock's annual dividend as a percentage of its current price. Unlike trailing yield which uses the past 12 months of actual payments, forward yield projects future income based on the most recently announced dividend rate.
Why Forward Yield Matters
Forward yield is more relevant for investment decisions because it estimates what you will earn going forward, not what was paid in the past. This is especially important when a company has recently increased its dividend, since trailing yield will lag behind the actual current payment rate.
The Power of Yield on Cost
Yield on cost is a powerful metric for long-term dividend investors. It measures your effective yield based on what you originally paid, not the current market price. As dividends grow year after year, your YoC climbs steadily, rewarding patient investors who bought quality dividend growers early.
Frequently Asked Questions
What is forward dividend yield?
Forward yield projects future dividends based on the most recently announced dividend, annualized. It is forward-looking compared to trailing yield, which uses actual dividends paid over the past 12 months. Forward yield gives a better estimate of what investors can expect to receive going forward.
Forward yield vs trailing yield - which is better?
Forward yield is more relevant for investment decisions since it estimates future income. Trailing yield is more reliable since it is based on actual payments that have already occurred. Use both: trailing yield confirms what was paid, forward yield estimates what is coming. If a company just raised its dividend, forward yield will be more accurate.
How is forward yield calculated?
Forward Yield = (Most Recent Dividend x Payment Frequency) / Current Price x 100. For a stock that pays $0.50 quarterly: ($0.50 x 4) / $100 = 2.0%. This annualizes the most recent declared dividend to estimate the yearly rate.
What is yield on cost?
Yield on Cost (YoC) = Current Annual Dividend / Original Purchase Price x 100. It shows your effective yield based on what you originally paid for the shares, not the current market price. As dividends increase over time, your YoC grows, often significantly exceeding the current market yield for long-term holders.
Sources
This calculator is based on the following authoritative sources:
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Investopedia - Forward Dividend Yield
Definition and explanation of forward dividend yield calculation.
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Investopedia - Yield on Cost (YOC)
Guide to understanding yield on cost and its importance for long-term investors.
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Schwab - Stock Yield Basics
Educational resource on dividend yield metrics and analysis.