### DEFINITION of Indicated Yield

Indicated yield is the dividend yield that a share of stock would return based on its current indicated dividend. Indicated yield is calculated by multiplying the most recent dividend paid by the number of dividend payments each year (the indicated dividend) and dividing the product by the most current share price. Indicated yield is usually quoted as a percentage:

﻿\begin{aligned}&\text{Indicated Yield}=\frac{(\text{MRD})\times(\# \text{ of DPEY})}{\text{Stock Price}}\\&\textbf{where:}\\&\text{MRD}=\text{most recent dividend}\\&\text{DPEY}=\text{dividend payments each year}\end{aligned}﻿

Stock ABC's most recent quarterly dividend, for example, might be $4. If the stock is currently trading at$100, the indicated yield would be:

Indicated Yield of Stock ABC = $4 X 4 /$100 = 16%

### BREAKING DOWN Indicated Yield

A dividend is a distribution of a portion of a company's earnings and is usually quoted in terms of the dollar amount each share receives (such as 25 cents per share). The indicated yield is often used as a forecasting technique to estimate a stock's annual dividend yield or the yearly earnings investors can expect for a particular stock. Many stock tables included in financial newspapers, such as the Wall Street Journal, include the indicated dividend of each stock to alert investors to the annual cash returns they might be able to expect. Since common stock dividends, as well as current prices, can change, the indicated yield is an estimate only.