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Guides & Glossary

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18 March 2019

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11 February 2019

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What does dividend yield mean?

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For an explanation of what ex dividend means,  also known as ‘ex div or ‘xd’ please watch this video.

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Click on the terms below to see what they mean.

The annual dividends expressed as a percentage of the current share price.

If a company has paid an interim dividend of 2p, and a final dividend of 3p, and the share price is currently £1.25p, the dividend yield would be 4% (2p + 3p = 5p / 125p = 4%).

A dividend yield can give you an indication of the level of income you might get from an investment company share. However, depending on the performance of the company, future dividends may be higher or lower than indicated by the current dividend yield.

The dividend yields published by the AIC don’t include any special dividends paid.

Also shown as ‘ex div’ or ‘xd’, this means that, if you buy the shares today, you won’t receive the most recently declared dividend.

Shares are being traded all the time on stock markets, so for administrative reasons there needs to be a point when buyers and sellers agree whether they will receive the most recently declared dividend. The point when the shares purchased will no longer receive the dividend is known as the ‘ex dividend date’ and the shares are said to have ‘gone ex dividend’. The share price will normally fall by the amount of the dividend to reflect this.

If you buy the shares when you’re still entitled to the most recently declared dividend, this is known as the shares being cum dividend.

If you buy shares when you’re entitled to the most recently declared dividend, this is known as the shares being ‘cum dividend’.

A dividend paid in addition to normal regular dividends in circumstances which are unlikely to be repeated in the near future.

The number of years that the current revenue reserves can provide the current financial year of dividends, including estimates or forecasts. Where companies publish retained earnings in place of revenue reserves, we cannot always publish this information. Please be aware that revenue reserves are taken from the company's annual accounts and this may not include the final dividend payment (if applicable), therefore the revenue reserves and dividend cover published may be higher than the actual cover following payment of the final dividend.

The undistributed income that the company keeps as reserves. Where companies publish retained earnings in place of revenue reserves, we cannot always publish this information. Please be aware that revenue reserves are taken from the company's annual accounts and this may not include the final dividend payment (if applicable), therefore the revenue reserves and dividend cover published may be higher than the actual amounts following payment of the final dividend.