How to Calculate Common Dividends Per Share

There are two main ways an investor can make money from a stock. The first is through share price appreciation, while the second is receiving dividends. Dividends are a portion of the after-tax earnings that are paid out to investors in a company, usually on a quarterly basis. The common term is dividend per share (DPS).

Things You'll Need

• Calculator or spreadsheet

Instructions

1. Do the formula for calculating dividend per share: DPS equals dividends paid divided by the number of shares outstanding. The result represents the dividend amount the shareholder will receive for each share owned, and it can apply to either common or preferred stock. However, preferred stock dividends generally are paid as a percentage of the amount invested.

2. Assume a particular company announces a $100,000 dividend on Nov. 2, 2013. On that "day of record," there were 100,000 shares of stock outstanding.

3. Divide the dividend payment by the total number of shares outstanding on the day of record. The formula is: $100,000 divided by 100,000 equals $1. This means each investor gets a dividend of $1 for every stock share owned.

4. Total all dividend payments for the entire year for an annual dividend per share measurement. Divide the annual dividend by the average number of shares outstanding throughout the year.

References

• Principlesofaccounting.com: Financial Reporting and Concepts