Dividend Per Share Calculator

If you’re thinking of venturing into the world of stocks and investments, you’ve probably heard the word dividends thrown around a lot. You may have read that a certain company has given out $1 million in dividends over the past year, but how much dividends per share does each investor get?

Using a dividend per-share calculator allows people to know how much money they can expect to receive in dividends for each share they own over a given period. This metric also gives a good indication of the direction a company is going in.

Read on to learn more about dividends per share, how to calculate them, and how to interpret them in a way that informs your decisions.

Definition of the Dividends Per Share Metric

Dividends per share is a metric that investors use to gauge how well a company is doing. If an investor finds the dividends per share of a company they’re thinking of investing in attractive, this prompts them to pull the trigger.

Conversely, an investor may decide to sell any stocks they have in a company if the dividend per share is in decline.

In essence, the dividend per share is the portion of a company’s profits that it decides to distribute among its investors.

How to Calculate Dividends Per Share

To calculate the dividends per share, this is the formula to use:

DPS = Dividends / No. of Shares

Let’s consider a situation where you own ten shares in a company, and the company has distributed a total of $100,000 in dividends in the past year. You should do the following to figure out how much you’ll get:

First, you should research how many shares the company has in circulation. Let’s assume that it has 5,000 outstanding shares.

Divide the total amount paid in dividends by the number of outstanding shares:

100,000 / 5,000 = $20

Therefore, the dividend per share is $20. Since you have ten shares, you’d get $200 in dividend payments.

In some cases, companies issue a one-time dividend. In this situation, you should take the amount of this dividend out of the equation before calculating the dividend per share.

In turn, the formula becomes:

DPS = (Dividends - One-Time Dividend) / No. of Shares

If all of this is a bit confusing, you can use dividends per share calculators like the one offered by Calcopolis.

Information Revealed By the Dividends Per Share Value

At face value, calculating the dividends per share ratio only tells you how much you’re expected to get in dividends from a given stock over a certain period.

In reality, the dividend per share metric is significantly more enlightening than this when closely examined and tracked.

The direction a company’s dividend per share is going in can speak volumes to its projected future performance and growth. A company with a rising dividend per share is confident in its future and is showing this by distributing more money to its shareholders.

However, there are other factors that affect a company’s dividend policy. They include the stability of the company’s earnings, debt obligations, and whether the company is in a rapid growth phase that requires maximum cash flow.

What Is a Good Dividend Per Share?

If you’re looking for a magic number considered to be a good dividend per share, you’ll be disappointed. This is because the average dividend-per-share ratio varies significantly from one industry to the next.

However, the general rule of thumb is that a dividend per share ratio between 2% and 6% is considered attractive.

Types of Dividends

There are several types of dividends paid out by companies. The main three types are cash, property, and stock dividends.

Other types include scrip dividends and liquidating dividends.

Cash Dividends

You’re most likely to receive dividends in the form of cash. You can calculate how much cash you’ll get for a given stock using the formulas explained above. Alternatively, you can use the Calcopolis dividend-per-share calculator.

Property Dividends

Other companies pay out dividends in the form of assets. These assets may come as inventory or vehicles, among other things.

Stock Dividends

The third type of dividends is what its name suggests. It involves the company distributing additional shares among shareholders based on the number of shares each of them already has.

Conclusion

When deciding on the stocks to invest in, you should have a clear idea of the return to expect from them.

The dividend-per-share metric is a great tool to use in your analysis. Use the Calcopolis dividend-per-share calculator to compute it with ease.

If you invest in the stock market, you may find the stock costs basis calculator particularly useful.

Authors

Created by Lucas Krysiak on 2023-04-21 12:52:45 | Last review by Mike Kozminsky on 2023-04-21 14:00:15