How to calculate your Dividend Income from your portfolio
I forget sometimes that things I take for granted that I know, I may have never written about, so this is how I calculate my yearly dividend income from my portfolio.
Please note: I also buy dividend stocks throughout the year, and reinvest dividends to buy more stock, so you have to really keep up on the portfolio changes to make sure you have the accurate information.
You’d think I’d be more diligent on this being a statistics freak, but I have never cared about really updating this list just because it’s one big pool of money for me, and I don’t need exact figures. I should try that for this month.
So in short, this is how you calculate your dividend income:
1. Take the ticker symbol
The ticker symbol like “T” for instance stands for TELUS. Find it on a site somewhere like Globe & Mail that tells you how much it pays out in dividends per share.
If you cannot find the stock on G&M or Yahoo Finance, then go directly to the company itself and look for something, anything that says “Dividend History”
2. Look up the declared dividend history
This is the dividend payout part, or simply called “the dividend” which in this case is $1.17 per share.
The yield is usually expressed in % based on the changing stock price. This is the screenshot from Globe & Mail:
Note: you don’t want to look at the dividend YIELD because that changes with the stock price itself.
Example of dividend yield:
If your stock is worth $10, and pays out $0.50 in dividends, the yield is 5%.
If your stock price drops to $1 and pays out $0.50 in dividends, the yield is 50%.
Since stock prices change by the second, yield is nice as an approximation, but not the be-all and end-all.
Dividend payout, is the ACTUAL amount paid out per share.
3. Multiply it out for the year
Sometimes shares pay out quarterly, or bi-annually. You have to multiply it out for the year (although if you bought the stock halfway through the year, you may have already missed one of their payments).
In this case, it shows $1.17 for the year or if you want to look at it, they pay quarterly in the amount of $0.29125 each share, each quarter:
4. Multiply it out by the shares held
Let’s say you own 5 shares of Telus.
5 x $1.17 = $5.85 in dividend income
5. Watch out for dividend cuts and stock splits
Dividend cuts = when a company stops paying dividends to preserve cash flow.
Stock splits = WOO HOO! Telus actually just went through one recently, and my stocks were originally around $50 for 1 each, and now they’re worth 2 x $25 each.
You need to re-check it every year at least
Every year, preferably every quarter/month, re-check to see if they raised or lowered the dividend because things change all the time.
It can be really time consuming however!