What Is a Forward Dividend Yield?

By Kristi Waterworth – Updated Sep 14, 2025 at 10:33 PM EST

Key Points

Forward dividend yield predicts future dividends vs. current stock price, aiding purchase decisions.
Calculate by multiplying recent dividends by number paid yearly, then divide by stock price.
Forward yield combines historical data and estimates, useful for anticipating future earnings.
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When you're considering wading into the ocean of dividend-paying stocks, it's important to get a good handle on the terminology. A forward dividend yield is one of a few key metrics you should consider. Understanding this metric can help you make better buying decisions. Read on to learn more.

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Infographic defining and showing the formula for forward dividend yield — Image source: The Motley Fool

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These companies pay their shareholders regularly, making them good sources of income.

Dividend yields, both forward and trailing, are also a good way to eliminate volatility in your portfolio. A huge dividend sounds great but is often a warning sign of issues to come. So, if your forward dividend rests snugly above about 6%, you should seriously consider skipping the stock unless you know of something that is creating an aberration in the yields for this year.

Forward dividend yields are just another tool to better understand what you're buying, as well as the outlook for you and your new partial ownership in the business.

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About the Author

Kristi Waterworth has been a contributing real estate and financial expert at The Motley Fool, covering real estate, investing, and personal finance topics, since 2020. Kristi has been interviewed by various TV media outlets and podcasts for her real estate investing expertise – from residential real estate to digital real estate and everything in between. Kristi’s journalist career spans over 25 years, and she has written about real estate investing, homeownership, and home construction specifically for the last decade. She was also previously a licensed Realtor and general building contractor before the Great Recession and housing market collapse. She holds a bachelor’s degree in American history from Columbia College in Missouri.

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