How to Calculate a Dividend Rate

Compare the dividend yield to other investments.

Compare the dividend yield to other investments.

Dividend paying stocks allow investors to profit in two ways. Investors can lock in a profit when the stock rises in price, but at the same time they can enjoy a steady stream of income from the dividend. Retirees and those on fixed income often use dividend paying stocks to supplement their pensions and Social Security. Other investors can profit as well by choosing stocks with a solid dividend yield and a good track record of performance.

Check the current price of the stock in the stock table of your favorite financial publication. You can also look the price up online at sites like CNN Money and Yahoo! Finance.

Find the amount of the dividend in the stock tables or online. Include any special dividends declared throughout the year, as well as the regular quarterly or semi-annual dividends. This information is available in the company's annual report, and in financial publications like the Wall Street Journal.

Calculate the total annual dividend by multiplying the dividend by the number of times it is paid during the year. For instance, a stock that pays a 0.25 dividend each quarter has an annual dividend rate of $1.00 per share.

Add any special dividends the stock paid throughout the year. For instance, if the stock with the 0.25 quarterly dividends issued a special dividend of 0.50 at the end of the year, the total dividend rate would be 1.50.

Items you will need

  • Financial publication
  • Calculator

About the Author

Based in Pennsylvania, Bonnie Conrad has been working as a professional freelance writer since 2003. Her work can be seen on Credit Factor, Constant Content and a number of other websites. Conrad also works full-time as a computer technician and loves to write about a number of technician topics. She studied computer technology and business administration at Harrisburg Area Community College.

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