where did we get the dividend rate?

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Expert Solution

Dividend rate is the total amount of the expected dividend payments from an investment, fund or portfolio expressed on an annualized basis plus any additional non-recurring dividends that may be received during the same period. This rate can be fixed or variable or adjustable based on the company's strategy.Dividend rate can be ascertained by the formula given below.

Dividend Rate = (Recent Dividend ) X ( No. of Dividend periods per year ) + extra Dividend

Suppose an investment pays a dividend of 75 cent on half yearly basis and also pays an extra Dividend of 20 Cent.

The Dividend Rate would be = (.75 x 2) + .20 = 1.70

Companies with strong cash flows, generally pays out Dividends. Few Companies with a radid growth typically reinvest any cash generated back into the business and they do not pay out any dividends to shareholders.Companies which spends less to grow their companies, generally they are more likely to distribute a percentage of income to shareholders as dividends.

jeff jeffy answered 1 year ago

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