Dividends and Yields

ICE Data Services -

Dividends and Yields

The "Annual Dividend" field in our products, how is that calculated? 


The indicated annual dividend ("IAD") is generally calculated by taking the most recent dividend and multiplying it by its payment frequency - for stocks, that's typically every quarter, or four times a year.

For example, GE pays a quarterly dividend of $0.10, so by multiplying $0.10 by 4, we derive an IAD, or annual dividend, of $0.40.

There's some cases where dividends are paid monthly, like closed-end bond funds.  For example, Nuveen's Florida Income fund pays .0575 each month.  To derive its annual dividend, that is multiplied by 12 to get $0.69.


One general exception to this rule is when there's uncertainty regarding the amounts and timing of a dividend.  For example, ETFs, like PPH, are designed to track sectors by owing a portfolio.  Over a year, the portfolio’s positions and weightings may change.  When those positions pay dividends, the fund passes them through to shareholders, but because it's so difficult to predict future changes in the portfolio (and therefore, changes in future dividends received), we aggregate all the dividends paid over the last trailing 12 months to derive annual dividend.


As mentioned above, IADs are important because they're used to calculate yields.  Yields are very important to investors and their advisors, as many of them invest to receive income (in the form of a dividend), so knowing how the IAD is calculated is important when servicing inquiries about IADs or yields.
Let's use the IADs for ABC and XYZ above to demonstrate how yield is calculated:

-  ABC trades at $30.50, with an IAD is $2.00.  Therefore, ABC's yield is $2.00 / $30.50 = .065557, or 6.556% (rounded)

-  XYZ trades at $45.60 with an IAD of $1.37.  Therefore, XYZ's yield is $1.37 / $45.60 = .030044, or 3.004%

These yields are calculated on the desktop, dynamically during market hours.

Dividend and Ex-Date

Two important pieces of information are a dividend's amount and its "ex-date". 

In the case of ABC above, the amount is $0.50 per quarter.  The ex-date is the first day the stock trades without the dividend, or "ex-dividend". 

Therefore, if ABC's ex-date is October 15th, anyone who owns ABC up to the 14th and sold it on the 15th get's the $0.50 quarterly dividend.

Other dates associated with dividends are the

1.  "Announcement" date, when the company announces information about the dividend.  This may include the dividend amount, when it goes ex-dividend, and other dates (see below).  Typically, the announcement follows a board meeting where the board of directors formerly votes on a dividend.  However, there are occasions when a company makes an announcement before it’s voted on officially, these are known as anticipated dividends.  Because it’s highly likely to be the amount, IDCO uses the anticipated dividend when calculating IAD.

2.  "Record" date, shareholders recorded as owning the stock on this date get the dividend (it's usually two business days after the ex-date, as it takes two business days for the trade to settle).

3.  "Payment" date, when the company distributes the dividend to shareholders.