What is the difference between Forward and Trailing Dividend Yield?

Trailing Dividend Yield is based on dividends actually paid over the past 12 months (historical). Forward Dividend Yield is based on the latest dividend payout annualized (projecting that the current payment rate continues over the next 12 months).

What is Yield on Cost (YOC)?

Yield on Cost measures the dividend yield relative to the price you originally paid for the stock, rather than its current market price. As companies increase their dividends over time, your YOC increases, showing the growing income power of your initial investment.

What is a dividend trap?

A dividend trap occurs when an investor buys a stock solely for its extremely high dividend yield, only for the company to cut its dividend shortly after. The high yield is usually a reflection of a falling stock price due to deteriorating fundamentals.

Dividend Yield

Calculate and analyze Forward vs. Trailing Dividend Yield, Yield on Cost (YOC), and project long-term dividend growth, DRIP compounding, tax drag, and inflation-adjusted total returns.

Live

Parameters

R Reset

Scenario Mode

Stock Purchase Price ($)Current market price per share of the stock.

$100.00

$0.01$10,000,000.00

Current Market Price ($)Current market price per share of the stock.

$100.00

$0.01$10,000,000.00

Dividend Input Type

Latest Dividend Payout ($)The most recent dividend payout amount distributed per share.

$1.00

$0.00$100,000.00

Payout Frequency

Projection Input Basis

Total Capital Invested ($)Total capital amount you want to invest.

$10,000.00

$10.00$1,000,000,000.00

Expected Dividend Growth Rate (%)Expected annual growth rate of the dividend payout.

5.0%

0.0%100.0%

Expected Price Appreciation (%)Expected annual appreciation rate of the stock price.

6.0%

-50.0%100.0%

Reinvest Dividends (DRIP)

Compare with Second Stock?

Analytics Dashboard

Forward Dividend Yield

4.00%

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Current Dividend Yield4.00%

Yield on Cost (YOC)4.00%

Annualized Dividend Amount$4.00

Scenario Analysis Projections

Scenario	Profile	Forward Dividend Yield
Base Settings	Default inputs and growth assumptions	4.00%
Conservative	Lower yield, higher inflation, haircuts	4.00%
Optimistic	Favorable yield, lower inflation, growth	4.00%
Stress Test	Severe economic crash and high inflation	4.00%

Result Interpretation

Dividend yield of 4.00% is strong, providing strong current income within the upper tier of Fidelity Dividend Benchmarks.

Mathematical Explanation

\text{Dividend Yield} = \frac{\text{Annual Dividend}}{\text{Stock Price}} \cdot 100

A stock purchased for **$100.00** per share, currently trading at **$100.00** with an annual dividend payout of **$4.00**, has a **forward dividend yield of 4.00%** and a **Yield on Cost of 4.00%**. Over a **10-year** holding period, an initial investment of **$10,000** is projected to grow to **$24,243** nominal (real value of **$18,938** adjusting for inflation), generating **$5,872** in cumulative dividend income.

How to Use the Dividend Yield

Dividend yield is a vital metric for income-focused investors. It measures the annual dividend payments a company distributes relative to its stock price. This calculator elevates standard analysis by comparing Forward vs. Trailing yields, determining your Yield on Cost (YOC), projecting dividend compounding (DRIP) with tax and inflation adjustments, and letting you compare two dividend investments side-by-side.

Input variables:

Scenario Mode: Bounded parameter in the mathematical model.
Stock Purchase Price ($): Bounded parameter in the mathematical model.
Current Market Price ($): Bounded parameter in the mathematical model.
Dividend Input Type: Bounded parameter in the mathematical model.
Latest Dividend Payout ($): Bounded parameter in the mathematical model.
Payout Frequency: Bounded parameter in the mathematical model.
Trailing 12-Month Dividend ($): Bounded parameter in the mathematical model.
Projection Input Basis: Bounded parameter in the mathematical model.
Total Capital Invested ($): Bounded parameter in the mathematical model.
Number of Shares Owned: Bounded parameter in the mathematical model.
Expected Dividend Growth Rate (%): Bounded parameter in the mathematical model.
Expected Price Appreciation (%): Bounded parameter in the mathematical model.
Reinvest Dividends (DRIP): Bounded parameter in the mathematical model.
Expected Inflation Rate (%): Bounded parameter in the mathematical model.
Dividend Tax Rate (%): Bounded parameter in the mathematical model.
Projection Duration (Years): Bounded parameter in the mathematical model.
Compare with Second Stock?: Bounded parameter in the mathematical model.
Stock B Purchase Price ($): Bounded parameter in the mathematical model.
Stock B Current Price ($): Bounded parameter in the mathematical model.
Stock B Latest Payout ($): Bounded parameter in the mathematical model.
Stock B Payout Frequency: Bounded parameter in the mathematical model.
Stock B Trailing Dividend ($): Bounded parameter in the mathematical model.
Stock B Div Growth Rate (%): Bounded parameter in the mathematical model.
Stock B Price Appreciation (%): Bounded parameter in the mathematical model.

Dividend Yield Explained: Math & Calculation Rules

Understand the mathematics behind Dividend Yield, standard formulas, worked examples, and decision limits.

Read Full Guide →