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Divides the past year's dividends by the current share price, exposing the historical income return relative to today's entry cost.
Trailing annual dividend yield is last year's dividend divided by the current share price. It shows the recent income return based on today's price.
The trailing annual dividend yield expresses actual dividends paid over the past twelve months as a percentage of the current stock price. This backward-looking yield shows the historical income return based on what was actually distributed to shareholders, providing a factual basis for comparing dividend-paying investments.
The calculation:
Trailing Dividend Yield = (Trailing Annual Dividend Rate / Current Stock Price) × 100
For example, if dividends totaling $2.40 were paid over the past year and the stock currently trades at $80, the trailing yield is 3.0%.
Why trailing yield matters:
- Historical accuracy: Based on actual payments, not projections
- Tax documentation: Matches actual dividend income received
- Performance measurement: Income component of total return calculations
- Dividend growth analysis: Track yield changes over time to assess dividend policy
Trailing vs. forward yield:
- Trailing yield: Reflects historical payments; may be outdated after dividend changes
- Forward yield: Projects future income; more relevant for investment decisions
- Divergence meaning: Large gaps indicate recent dividend increases or decreases
Interpreting yield changes:
- Yield rising, price stable: Dividend increases—company returning more cash
- Yield rising, price falling: Market may be signaling dividend risk
- Yield falling, price rising: Stock appreciation outpacing dividend growth
- Yield falling, dividend cut: Direct reduction in shareholder income
Using trailing yield effectively:
- Screen for consistency: Look for stable trailing yields over multiple years
- Compare to forward: Large differences warrant investigation
- Assess total return: Combine with price appreciation for complete picture
- Industry benchmarking: Compare within sectors for meaningful analysis
Trailing yield provides historical context, but forward yield is typically more useful for investment decisions. Use both together: trailing yield confirms past behaviour, forward yield informs future expectations.
How it relates
Trailing Annual Dividend RateTrailing annual dividend rate is the total dividend per share paid over the last year. It shows what the company actually distributed in the recent past.÷Closing PriceClosing price is the last traded price of the period. It's the most common reference price for charts and indicators.=Trailing Annual Dividend Yield
Where it fits
Trailing Annual Dividend Yield→DividendA dividend is a distribution of a company's earnings to shareholders, typically paid in cash on a regular schedule as a way to share profits with investors.