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Do I receive the posted dividend yield every quarter?

Generally, yes. But technically speaking, you don’t get a dividend yield, you get a dividend payout – and that’s not the same thing.

A dividend is a distribution of part of the profits of a company, decided by the board of directors, and paid to its registered shareholders on a specific date.

After being declared, a company with ordinary actions who pays a dividend generally distributes the dividend quarterly. However, and this is where the confusion often lies, the amount the company quotes is normally an annual figure.

Key points to remember

  • Dividends, a distribution of a portion of a company’s profits, are usually paid out in cash quarterly to shareholders.
  • Dividend yield is the annual dividend per share divided by the share price, expressed as a percentage; it will fluctuate with the stock price.
  • Dividend payments are voluntary on the part of a company, although suspending a dividend or paying less than expected does not sit well on Wall Street.

How are dividends calculated?

Thus, to calculate the amount you will receive each trimesteryou will need to take the dividend amount shown and divide it by four.

For example, if you own Cory’s Tequila Corporation (CTC), which pays an annual dividend of $1 on a quarterly basis, you will receive $0.25 every three months.

These numbers are per share, of course. So if you owned 100 shares of Cory, you would receive $25 in dividends each quarter and $100 for the full year.

Although cash dividends are the most common, dividends can also be issued in the form of shares or other property.

Dividends and dividend yield

Investors often view a company’s dividend by its yield, a measure of the dividend as a percentage of the current market price. Represented as a percentage, the dividend yield is calculated according to this formula:

Image by Sabrina Jiang © Investopedia 2021

So, let’s say Cory’s Tequila is trading at $15 per share. Its dividend yield is 6% ($1 ÷ $15 = 0.06).

According to the source, the annual dividend used in the calculation could be the total of the dividends paid during the last fiscal yearthe total dividend paid in the last four quarters, or the most recent dividend multiplied by four.

It is important to remember that it is the dividend of a share yield will fluctuate with the market price. If CTC is trading at $10 and it pays the $1 dividend, its dividend yield is 10% ($1 ÷ $10). If the price of CTC rises to $20 and it still pays the same dividend, the yield is only five percent ($1 ÷ $20). A change in yield occurs every time the stock price changes, so do not mistakenly equate a change in dividend yield with a change in the payment you receive.

No guaranteed dividend

Keep in mind that unlike interest on their corporate bonds, companies are not required to pay dividends. This is an entirely voluntary action that the company decides on its own.Most companies will try to maintain some level of consistency with their dividend payout history to attract investors, but the payout can change at any time, at least for common stock.Dividends on preferred shares are generally fixed, although the directors of the company can vote to withhold payment, or even to call the preferred shares.

Companies in financial trouble might need to reallocate money to different projects, or the powers that be might just change their minds and no longer want to pay a dividend. It doesn’t happen often: Wall Street tends to react negatively when a company suspends its dividends or even lowers them by a quarter. Nevertheless, investors should always be aware that while a company’s long history of increasing dividends is a good indication of future payouts, dividends are not guaranteed.

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