The statement of shareholder equity details changes to equity-related metrics such as stock-based compensation, the number of stock shares outstanding and the amount the company paid in dividends. Statements of shareholder equity also record changes in these amounts from the previous year. Established companies pay dividends quarterly; the amount to which a stockholder is entitled varies based on the company's performance for the quarter and the type and number of shares the investor owns.
1. Download a company's financial statements from the previous year and use them as a model for your calculations. Publicly traded companies are required to file timely financial statements with the Securities and Exchange Commission, which are available via the SEC's EDGAR database. Independent market research firms such as Moody's or Morningstar can also provide the necessary information.
2. Determine the class of stock for which you will figure the dividend, then record the number of shares the firm has issued for the year using a computer spreadsheet. Statements of shareholder equity record both the total dividend paid for each class of stock and the dividend per share (DPS).
3. Determine the policy the company follows when issuing dividends. Residual dividend policies and stability dividend policies are common, although hybrid dividend policies are also possible. Residual dividend policies allow a company to issue dividends if it can find no acceptable investment alternative. Stability dividend policies issue a predetermined dividend based on quarterly or yearly earnings.
4. Consult historical dividend payout information and corresponding performance data to estimate how much capital the company can afford to pay as a dividend. Company officials and directors determine exactly how much money the firm will pay in dividends. Compare the company's prior performance and dividend payout for an effective way to estimate a current payout.
5. Record the amount the company pays in dividends each quarter using a computer spreadsheet program. When you have ascertained the amount of money the firm will pay in dividends, divide that amount by the number of shares it has issued. Do not include special dividend payments in your calculations. The firm's DPS and total dividend payment is recorded on its statement of shareholder equity.
Items you will need
- Financial statements
- Computer spreadsheet
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