Forward Dividend Yield

Forward Dividend Yield refers to the expected annual Dividend Payments from a Stock, expressed as a percentage of its current market price. It is calculated by dividing the estimated annual Share/">Dividends Per Share by the current Share price. This metric helps investors assess the potential income generated from a Stock investment relative to its price.

Formula: Forward Dividend Yield = (Estimated Annual Share/">Dividends Per Share / Current Share Price) x 100

Example 1: If a company expects to pay a dividend of $2 per Share in the next year and its current Share price is $40, the forward Dividend Yield would be:

Forward Dividend Yield = ($2 / $40) x 100 = 5%

Example 2: If another company anticipates an annual dividend of $1.50 per Share, with a current Stock price of $30, the forward Dividend Yield would be:

Forward Dividend Yield = ($1.50 / $30) x 100 = 5%

Use Case: Investors looking for income-generating Stocks often use forward Dividend Yield to compare potential investments. A higher yield might indicate a more attractive investment opportunity, but it’s essential to consider other factors, such as the company’s financial health and dividend Sustainability.