Dividend yield is equal to: Projected Cash Dividend/Share Price
Calculation of the numerator (cash dividend) and the denominator (share price)
should occur separately.
To calculate Dividend Yield:
1. Enter an as-of date. The default is the current date. However, the as-of
date may be changed to the end of the reporting period or last day of the
period you are analyzing. You may also select an as-of date by clicking on
the calendar icon and selecting a date from the calendar.
2. Select an Annual Dividend to use.
Click on one of three methods of calculating the numerator share price.
- Indicated: The indicated annual dividend is the last dividend payment
amount, based on your defined as-of date.
- Historical average: The average amount, based on a date range over
which the historical average will be computed. If selected, Begin Date
and End Date entry fields are displayed. You must enter these dates in
order to define the date range over which the historical average will be
defined.
- Management-tenured: The firm provided number for annual dividend
(in dollars). If selected, an annual dividend entry field is displayed.
You must enter an annual dividend amount.
3. Select a Stock Price to use. Identifies
the denominator to use, that is, the
projected share price over which the expected dividend payments should be
calculated. Absent the inclusion of varying assumptions, you are required to
estimate an average share price you expect to see over the life of the
option. Three methods of calculating a denominator share price is available.
- Most Recent Dividend Payment Date: The stock price on the date in
which the most recent dividend payment was made.
- User Date: A stock price on the date you define. In order to obtain the
stock price on a specific date. If selected, an On Date entry field is
displayed. You must enter a date or select a date using the calendar icon.
- Average Price Over Historical Period: You must define the historical
date period to be used in order to calculate an average stock price. If
selected, Begin Date and End Date entry fields are displayed. Enter the
dates or select dates using the calendar icon.
4. Click the Calculate button.
The dividend yield is calculated and displayed
to the right of the Calculate button.
To save the calculations:
- Click the Save to Selection button. The risk-free rate calculation is
removed from the page and moved to the Dividend Yield Parameters
section at the bottom of the page. Note: This information can also be seen
on the Your Selection page.
To remove saved calculations:
- Click the red Remove ‘X’. However, be aware that there is no confirmation
before it is removed.
To print an audit report for the criteria entered:
- Click on the Print Audit Report button.