UK Accounting Glossary
The indicated yield is the indicated dividend for a share of stock divided by the stock price. Since the indicated dividend is a projection of dividends for the next twelve months, the indicated yield estimates the annual return from cash dividends a stockholder can reasonably expect. Because the stock’s total return comprises capital appreciation along with cash dividends, the indicated yield represents only part of the return calculation. . However, if the indicated yield is high and the dividend safe, the risk of a substantial decline in stock price is usually relatively small. Thus the indicated yield is important: Assuming the company’s dividend policy is conservative and predictable, the indicated yield represents the portion of total return that is relatively certain. The indicated yield can be usefully compared with those of other stocks and the interest rate on debt instruments. The indicated yield of a stock, where applicable (some stocks don’t pay dividends), is presented in stock tables.
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This glossary post was last updated: 9th February 2020.