How does future dividends work?
Within PDT, we display a security’s future dividends. This helps investors plan for their expected dividend income.
Types of expected dividends
These future dividends are expected and are determined in two ways:
- Announced: These are dividends that have been officially announced by the company and are almost certain to be paid. Once a dividend action has been added to your portfolio around the same date, an announced dividend will be marked as “Received”.
- Estimated: Estimated dividends are calculated by us based on previously paid dividends. This helps to give you an indication of what you can expect in dividends in the future, although these estimates are not guaranteed.
Payment frequency
The frequency of dividend payments is determined by a company's previous payment cycle. For example, Coca-Cola pays its dividend quarterly, with a pattern of three interim dividends and one final dividend:
- 2024
- …
- 10/01/2024: $ 0.485 (final dividend)
- 07/01/2024: $ 0.485 (interim)
- 04/01/2024: $ 0.485 (interim)
- 2023
- 12/15/2023: $ 0.46 (interim)
- ...
Interim dividend means an interim payment based on provisional results. Final dividend is the definitive payment after approval of the annual figures, at the end of the financial year.
How is the dividend estimate calculated?
We calculate the estimate of future dividends based on past payments and the compounding annual dividend growth rate (CAGR) over the past three years.
If you would like to know more about how we calculate dividend growth, read our article What does dividend growth mean?
Based on historical growth rates, we know that Coca-Cola has a 3-year compound annual growth rate (CAGR) of 4.91%. Applying this growth to the dividend from the previous period (say, 07/01/2024) gives an estimate of $ 0.51 dividend per share on 07/01/2025.
$0.485 × (1 + 4.91%) ≈ $ 0.51
- 2025
- …
- 01/10/2025: $ 0.51 (Final dividend) - Estimated
- 01/07/2025: $ 0.51 (Interim) - Estimated
- 01/04/2025: $ 0.51 (Interim) - Announced
- 2024
- 16/12/2024: $ 0.485 (Interim) - Received
- …
Within a year, it is possible to receive a one-time special dividend. This is often issued when a company has made unexpectedly high profits or wants to return excess reserves to shareholders. These special dividends are excluded from the calculation.
Dividend Payment Currency
Dividends are always shown in the base currency of the security. This prevents estimates from being affected by exchange rate fluctuations in the future. As a result, we provide the purest possible picture of expected dividend income without uncertainty about currency movements.