dividends per share

(noun)

The amount shareholders earn per share.

Related Terms

Examples of dividends per share in the following topics:

  • Dividend Yield Ratio

    • The dividend-price ratio is a company's annual dividend payments divided by market capitalization, or dividend per share divided by the price per share.
    • The dividend yield or the dividend-price ratio of a share is the company's total annual dividend payments divided by its market capitalization, or the dividend per share, divided by the price per share.
    • Preferred share dividend yield is the dividend payments on preferred shares, which are set out in the prospectus.
    • For example, take a company which paid dividends totaling 1 per share last year and whose shares currently sell for $20.
    • Current dividend yield = Most recent Full-Year Dividend / Current Share Price

  • Defining Dividends

    • Dividends are a portion of company earnings regularly paid to shareholders, paid as some fixed amount per share price.
    • A dividend is allocated as a fixed amount per share.
    • Dividends per share (DPS) refers to the dollar amount shareholders earn for each share, calculated by dividing total dividend amount by total number of shares outstanding.
    • Dividend yield refers the ratio between dividends per share and the market price of each share, and it is expressed in terms of percentage.
    • Payout ratio is calculated by dividing the company's dividend by the earnings per share.

  • Performance per Share

    • Earnings Per Share (EPS) is the amount of earnings per each outstanding share of a company's stock.
    • P/E Ratio = Market Price Per Share / Annual Earnings Per Share .
    • Dividend Yield ratio shows the earnings distributed to stockholders related to the value of the stock, as calculated on a per-share basis.
    • The dividend yield or the dividend-price ratio of a share is the company's total annual dividend payments divided by its market capitalization—or the dividend per share, divided by the price per share.
    • The second method, using per-share values, is to divide the company's current share price by the book value per share, which is its book value divided by the number of outstanding shares (Share Price / Book Value Per Share).

  • Accounting for Preferred Stock

    • issuing so many additional shares of common stock that earnings per share are less in the current year than in prior years; and
    • Unlike common stock, which has no set maximum or minimum dividend, the dividend return on preferred stock is usually stated at an amount per share or as a percentage of par value.
    • Therefore, the firm fixes the dividend per share.
    • Stock preferred as to dividends means that the preferred stockholders receive a specified dividend per share before common stockholders receive any dividends.
    • For no-par preferred stock, the dividend is a specific dollar amount per share per year, such as USD 4.40.

  • Dividends Payable

    • Dividends are payments made by a corporation to its shareholders; the payment amount is reported as dividends payable on the balance sheet.
    • There are two ways to distribute cash to shareholders: share repurchases (reported as treasury stock in the owner's equity section of the balance sheet) or dividends.
    • A dividend is allocated as a fixed amount per share.
    • Therefore, a shareholder receives a dividend in proportion to the shares he owns -- for example, if shareholder Y owns 100 shares when company Z declares a dividend of USD 1.00 per share. then shareholder Y will receive a dividend of USD 100 for his shares.
    • The per share dividend amount is multiplied by the number of shares outstanding and this result is debited to retained earnings and credited to dividends payable.

  • Dividend Payments and Earnings Retention

    • A dividend is allocated as a fixed amount per share.
    • Dividends are usually paid in the form of cash, store credits (common among retail consumers' cooperatives), or shares in the company (either newly created shares or existing shares bought in the market).
    • Further, many public companies offer dividend reinvestment plans, which automatically use the cash dividend to purchase additional shares for the shareholder.
    • Thus, if a person owns 100 shares and the cash dividend is $0.50 per share, the holder of the stock will be paid $50.
    • They are usually issued in proportion to shares owned (for example, for every 100 shares of stock owned, a 5% stock dividend will yield five extra shares).

  • Methods of Paying Dividends

    • Dividends, which are distributed based on how many shares each person owns, can be paid using cash, stock, or other company property.
    • A dividend is allocated as a fixed amount per share.
    • Thus, if a person owns 100 shares and the cash dividend is 50 cents per share, the holder of the stock will be paid 50 dollars.
    • For example, for every 100 shares of stock owned, a 5% stock dividend will yield 5 extra shares.
    • For large companies with subsidiaries, dividends can take the form of shares in a subsidiary company.

  • Earnings per Share

    • Earnings per share (EPS) is the amount of a company's earnings per each outstanding share of a company's stock.
    • Earnings per share (EPS) is the amount of earnings per each outstanding share of a company's stock.
    • Earnings per share for continuing operations and net income are more complicated; any preferred dividends are removed from net income before calculating EPS.
    • If preferred dividends total $100,000, then that money is not available to distribute to each share of common stock.
    • Diluted Earnings Per Share (diluted EPS) is a company's earnings per share (EPS) calculated using fully diluted outstanding shares (i.e. including the impact of stock option grants and convertible bonds).

  • Discounted Dividend vs. Corporate Valuation

    • The dividend discount model values a firm at the discounted sum of all of its future dividends, and does not factor in income or assets.
    • The dividend discount model (DDM) is a way of valuing a company based on the theory that a stock is worth the discounted sum of all of its future dividend payments.
    • There is no reason to use a calculation of next year's dividend using the current dividend and the growth rate, when management commonly disclose the future year's dividend, and websites post it.
    • b) If the stock does not currently pay a dividend, like many growth stocks, more general versions of the discounted dividend model must be used to value the stock.
    • One common technique is to assume that the Miller-Modigliani hypothesis of dividend irrelevance is true and, therefore, replace the stocks's dividend D with E earnings per share.

  • Stock Dividends

    • If a 5% stock dividend is paid, the total number of shares outstanding increases by 5%, and each shareholder will receive 5 additional shares for each 100 held.
    • As the number of shares outstanding increases, the price per share drops because the market capitalization does not change.
    • A stock split is paid by switching out old shares for a greater number of new shares.
    • A stock dividend could be paid from shares not-outstanding.
    • Cash dividends are taxed, while stock dividends are not .