How to Calculate the Amounts of Dividends for Common Stock

by Carter McBride

If a corporation makes money, it has two choices: put the money into retained earnings or distribute the money to corporate shareholders through dividends. Most corporations will use a mixture of both. The corporation will pay the dividends on a per share basis. The corporation will announce a recording date when shareholders on record at the time will receive the dividends.

Look up the amount of stock you owned on the date of record. This should be in your portfolio of how much stock you own and if you bought or sold stock during the year. Only count common stock, do not count preferred stock. For example, an investor owns 10,000 common shares in Firm A.

Ask the company the dividend rate. The company will disclose this information to shareholders and the public. In the example, Firm A paid dividends of $0.50 a share.

Multiply the dividends per share by the amount of common stock owned on the date of record. In the example, $0.50 times 10,000 common shares equals dividends of $5,000.

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