Calculating Dividend Per Share (DPS)
Calculating the Dividend Per Share (DPS) is a straightforward process that allows investors to determine the amount of dividend income they can expect to receive for each share of stock they own. The DPS is an important metric for investors as it helps them assess the profitability and potential return on investment of a particular stock.
Formula for Calculating Dividend Per Share (DPS)
The formula for calculating DPS is:
|Dividends Paid to Shareholders
|Number of Outstanding Shares
|DPS = ——————————-
The dividends paid to shareholders can be obtained from the company’s financial statements, specifically the income statement or the statement of retained earnings. The number of outstanding shares can also be found in the company’s financial statements or obtained from reliable financial data sources.
Let’s say a company paid $1,000,000 in dividends to its shareholders and has 1,000,000 outstanding shares. To calculate the DPS, we can use the formula:
|DPS = $1,000,000 / 1,000,000
|DPS = $1
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