How Do You Interpret Dividends Per Share?

The term dividends per share (DPS) refers to the total dividend a company pays out over a 12-month period, divided by the total number of outstanding shares.

A company uses this calculation to share profits with its shareholders.

DPS can indicate how profitable a company is over a fiscal period.

How do you analyze dividends per share?

To calculate the DPS from the income statement:

  • Figure out the net income of the company.
  • Determine the number of shares outstanding.
  • Divide net income by the number of shares outstanding.
  • Determine the company’s typical payout ratio.
  • Multiply the payout ratio by the net income per share to get the dividend per share.

What is the dividend per share?

Dividend per share (DPS) is the sum of declared dividends issued by a company for every ordinary share outstanding. The figure is calculated by dividing the total dividends paid out by a business, including interim dividends, over a period of time by the number of outstanding ordinary shares issued.

Why is dividend per share important?

The dividend per share represents how much cash a company pays in dividends for each share of issued common stock. The dividend per share is an important measure for investors, as it gives them insight as to how much of an income stream they might generate by investing in a given company.

Is a high dividend per share good?

High-dividend stocks can be a good choice. Dividend stocks distribute a portion of the company’s earnings to investors on a regular basis. Most American dividend stocks pay investors a set amount each quarter, and the top ones increase their payouts over time, so investors can build an annuity-like cash stream.