How To Calculate Dividend Per Share

How To Calculate Dividend Per Share

13 December, 2024

Synopsis

  • A dividend is a specific amount a publicly listed company pays to its shareholders against every share they hold.
  • Dividend per share helps measure company earnings for each shareholder.
  • Dividend per share is calculated using two methods, namely, common dividend per share and earnings per share.

There are multiple reasons to invest in company stocks, one of the most befitting being the dividend payouts. It correlates to company profit distribution and keeps investors happy. So, whether one is a novice or a seasoned investor, it makes sense to know how to calculate Dividends Per Share (DPS). This article offers an insight into what is dividend per share and introduces methods of calculating dividend per share with an example. It needs to be mentioned here that not all companies pay dividends. So if you want to get dividends look to invest in stocks that regularly pay dividends.

What is Dividend Per Share (DPS)?

Simply put, Dividend per share is the dividend per share paid by a company. When companies make a profit, they may choose to distribute the same among their shareholders.

What Are Different Types of Dividends?
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Before we learn how to calculate dividends per share, we must understand the different types of dividends. Remember that dividends aren't always paid to shareholders as cash. Here's a list of other dividend types.

  • Cash: This is the most popular way of paying dividends to a shareholder. Dividends are paid in cash form.

  • Stock dividend: This is dividend that is paid in the form of shares. The company issues new shares to shareholders as dividends.

How To Calculate Dividend Per Share-Methods, Formulas, and Example

Dividend per share is calculated using the following formula:

Dividend per share: Total amount of dividend distributed / Total number of outstanding shares

Let’s understand how to calculate dividends per share with an example.

Say a company pays total annual dividend of ₹20 Lakh. The total number of outstanding shares is 5,00,000.

Dividend Per Share calculation formula, i.e., 20,00,000 / 500,000 = ₹4/- per share.

Track Your Investments With HDFC Bank Demat Account

Once a company declares dividends for its investors, they are automatically credited to the bank account linked to your demat account. Now that you know how to calculate dividends, you can structure your investment portfolio better. You can also use the funds in your HDFC Bank savings account to purchase and hold securities electronically in your HDFC Bank Demat Account.

Open your HDFC Bank Demat account and enjoy potential dividends on your investments.

*Disclaimer: Terms and conditions apply. This is an information communication from HDFC Bank and should not be considered as a suggestion for investment. Investments in securities market are subject to market risks. Read all the related documents carefully before investing.

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