How to Determine the Total Dividends for Each Class of Stocks

by Mark Kennan

Corporate stocks are typically divided into two classes: common shares and preferred shares. Preferred shares are promised a dividend of a specified amount based on the par value, or issuing value, of the preferred stock. Common shares, on the other hand, are not promised any dividends but can receive larger dividends and share in the growth of the company. You can calculate the total dividends paid based on the company's net income and retained earnings, which can be found in the annual report.

1. Subtract the retained earnings from the net income for the company to figure the total dividends paid. For example, if the company has $5 million in net income and $2 million in retained earnings, the company paid $3 million in dividends.

2. Multiply the par value of each preferred share by the percentage dividend to find the preferred dividend per share. For example, if the company's preferred shares have a $25 par value and pay a 7.2 percent dividend, each share receives a $1.80 dividend.

3. Multiply the number of preferred shares by the preferred share dividend to find the total preferred dividends paid. In this example, if the company has 1 million preferred shares, multiply $1.80 by 1 million to find the company pays $1.8 million in preferred dividends.

4. Subtract the preferred share dividends from the total dividends paid to find the common share dividends. In this example, subtract the $1.8 million of preferred dividends from the $3 million in total dividends to find the company paid $1.2 million in common stock dividends.