# How to calculate how much of dividends will be earned for an ETF?

Let's say that I have 100 shares of the SPYD ETF. The current Annual Dividend/Yield is \$2.27/5.47%.

Is that the case that after a year I'm going to get paid 100 * 2.27 = \$227.00?

• Note that the dividend is not "income" to you - it's a "distribution" of ~2.27% of your investment - the value of the ETF will go down by the same amount. Commented May 7, 2021 at 19:42
• Is it not the other way round? You are paid Dollars and calculate the percents retrospectively from the sum of Dollars and the current price per share. Commented May 8, 2021 at 22:53

Published dividend yield is calculated based on the current unit/share price and most recent annualized distribution. Your yield will change over time as you receive dividends.

Assuming you paid the current price of \$41.68 per unit for your 100 units of SPYD, your cost basis is \$4,168. If the distribution holds to the most recent paid of \$0.6362/unit your annual distribution will be \$2.5448/share or \$254.48 for a yield of 6.1%.

If, next year the unit price is \$61, and the quarterly dividend is up to \$0.85/unit, the published yield will be something like 5.6% (\$0.85 * 4 / \$61); but your yield will be based on your purchase price of \$41.68, so \$0.85/unit would be 8.2%.

Distributions tend to fluctuate over time. The actual most recent annual distributions sum to \$1.9026

03/24/2021     \$0.6362
12/23/3030     \$0.6066
09/23/2020     \$0.2636
06/24/2020     \$0.3962

If you had bought in June 2020, the unit price was around \$28.50; the published yield at the time would have been something like 5.6% (\$0.3962 * 4 / \$28.50). In the last year you would have actually received \$190.26 for your 100 units which cost you \$2,850 for an actual annual yield of 6.6%

• Also your calculation of "your yield" may be a bit confusing. I've never considered "yield" to be based on the purchase price, but rather the current value of the investment. Say I bought an ETF 50 years ago for \$1, and it's now \$100 and pays a \$1 dividend. Is my "yield" 100%? I'd argue that it's still 1% since I could sell the etf for \$100 so my choice to stay in the ETF has a "cost" of \$100. Commented May 7, 2021 at 19:16
• A lot of people harp on your first point about 'what is the value of a dividend' if it comes out of the investment; and that's fine for someone else to write; I think it wildly over complicates a relatively simple concept. Buffet also refers to distributions this way in the Berkshire Annual Reports. My investment has a current value, sure, but I didn't buy it at the current value I bought it where ever I bought it; and part of the value of very long term holding can be very high dividend yields relative to your initial investment. I don't disagree with you but I'm happy with what I wrote.
– quid
Commented May 7, 2021 at 19:39
• fair enough - I've moved it to a comment on the question rather then getting construed as a critique of your good answer. Commented May 7, 2021 at 19:43