Published By TradeSmith Customer Success
TradeSmith uses a trailing dividend formula. A trailing dividend means that we take the sum of all the dividends in one year and then divide this by the latest close price for any security. If we are in the middle of a current year, we include the most recently issued dividends and the previous year's issued dividends.
We ONLY include the following types of dividends:
- Ordinary dividends: a regularly scheduled payment made by the company)
- Daily accrual funds: the amount of income earned in a mutual fund)
- Underlying payouts: the security or asset that must be delivered with a contract or warrant is exercised).
Let's look at Coterra Energy (CTRA) as an example. Figure 1
Figure 1. As of 5/25/2022
We calculate the following dividends for CTRA:
- 8/11/21 = $0.11
- 11/12/21 = $0.3
- 3/4/22 = $0.56
- 5/12/22 = $0.6
Trailing dividend yield = sum of the dividends/ latest close price x 100%:
0.11+0.3+0.56+0.6 = 1.57/32.6 = 0.0481595 x 100% = 4.82% Dividend Yield
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