Examples of How to Calculate the Dividend Per Share

by Matt McGew

A company pays dividends to share earnings with shareholders. A company does not have to pay a dividend, and it can instead choose to reinvest the earnings back into the company. You can manually calculate the dividend per share paid by the company. Investors commonly calculate the dividend per share to determine their expected dividend payment based on the number of shares held.

Common Stock Dividend

Determine the amount of dividend paid by the company for the period. For example, assume a company paid $250,000 in dividends in the most recent quarter.

Determine the amount of outstanding shares of stock that the company had over this same period. For example, assume a company had 500,000 shares of stock outstanding.

Divide the dividends paid by the number of shares outstanding. Continuing the same example, $250,000 / 500,000 = .50. This figure, 50 cents, represents the dividend per share of stock paid by the company.

Preferred Dividend

Determine the par value of the preferred stock. Par value is listed in the prospectus for preferred stock. For example, assume the preferred stock has a par value of $100.

Determine the preferred dividend rate for the preferred stock. You can also find this information on the prospectus. For example, assume the preferred stock pays a dividend of 6 percent.

Multiply the par value of the preferred stock expressed as a percent by the dividend rate. Continuing the same example, $100 x .06 = $6. This is the dividend per share of the preferred stock.

Stock Split and Dividends

Determine the total dividend the company will pay as a dividend. For example, assume the company will pay $1 million in dividends.

Determine the current amount of shares the company has outstanding. For example, assume the company has 500,000 shares outstanding.

Determine the stock split ratio. For example, assume the company plans a 2-to-1 stock split before paying the dividend. Calculate the number of shares outstanding after the split. Continuing the same example, 2 x 500,000 = 1 million.

Divide the dividend the company will pay by the number of shares outstanding after the split. Continuing the same example, $1 million / 1 million shares = $1 per share. This is how much dividend per share the company will pay after the stock split.

References

About the Author

Since 1992 Matt McGew has provided content for on and offline businesses and publications. Previous work has appeared in the "Los Angeles Times," Travelocity and "GQ Magazine." McGew specializes in search engine optimization and has a Master of Arts in journalism from New York University.