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.

  • 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.

  • 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.

  • The Valuation of Stocks

    • Your annual rate of return is 5%, and you expect the corporation to pay $2 per share indefinitely.Consequently, you compute the market value of this stock of $40 per share in Equation 17.
    • Your rate of return equals 10%, and you expect the corporation to pay $2 dividend that grows 5% per year.Thus, we compute a market value of the stock of $40 per share in Equation 19.
    • We calculate a market value of $25 per share because the dividend grows slowly in Equation 20.
    • Your rate of return is 12%, and you expect the corporation to pay $5 at Time 1 with dividends growing at 5% per year.We calculated a market value of this stock of $71.43 per share in Equation 21.
    • Using Equation 18, we can solve for different variables, depending what we know.For example, the stock price equals $100 per share while dividends are $3 per share that grows 5% per year.Compute the rate of return on this investment.We calculate a rate of return of 8% per year in Equation 23.

  • 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.

  • Calculating Diluted Earnings per Share

    • Basic EPS = USD 922,590,000 / 3,417,000,000 = USD .27 per share.
    • The basic earnings per share formula involves taking the income available for common shareholders (net income minus preferred stock dividends), divided by the weighted average number of common shares outstanding.
    • So, basic earnings per share tends to have a higher value than diluted earnings per share.
    • Diluted earnings per share is the most conservative per share earnings number because the equation takes into account the largest number of common shares that could be outstanding.
    • Earnings per share shows the amount of income applicable to each share of common stock.

  • 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 .