- How to Calculate Annual Dividends to Preferred Stockholders
- How to Calculate the Return on Initial Investment of Preferred Stock
- Examples of How to Calculate the Dividend Per Share
- How to Calculate Cumulative Dividends Per Share
- How to Calculate Dividends in Arrears
- How to Calculate Preferred Stock Outstanding
When you invest in preferred shares of a company, you are investing more for the dividend payments than for growth in the stock price. If a company issues preferred shares, it must pay the promised dividends on those shares before it can pay any dividends on the company's common stock. You can find the par value and the preferred dividend percentage in a company's preferred stock prospectus. The par value is the price at which the company issued the stock.
Divide the dividend percentage by 100 to convert to a decimal. For example, if the stock pays a 4 percent dividend, divide 4 by 100 to get 0.04.
Multiply the dividend as a decimal by the par value to find the preferred dividends per share. In the example from the previous step, if the par value equals $25, multiply $25 by 0.04 to get $0.10.
Multiply the dividends per share by the number of preferred shares you own to calculate the dividend distribution you will receive for your preferred stocks. In this example, if you own 400 shares, multiply $0.10 by 400 to find you will earn $40 in preferred stock dividends.
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