Ratio Analysis Tutorials
- Ratio Analysis of Financial Statements (Formula, Types, Excel)
- Ratio Analysis
- Liquidity Ratios
- Turnover Ratios
- Profitability Ratios
- Profit Margin
- Gross Profit Margin Formula
- Operating Profit Margin Formula
- Net Profit Margin Formula
- EBIDTA Margin
- Earnings Per Share
- Basic EPS
- Diluted EPS
- Basic EPS vs Diluted EPS
- Return on Equity (ROE)
- Return on Capital Employed (ROCE)
- Return on Invested Capital (ROIC)
- Return on Total Assets (ROA)
- Return on Average Capital Employed
- Capital employed Employed
- Return on Average Assets (ROAA)
- Return on Average Equity (ROAE)
- Return on Assets Formula
- Return on Equity Formula
- DuPont Formula
- Net Interest Margin Formula
- Earnings Per Share Formula
- Diluted EPS Formula
- Contribution Margin Formula
- Revenue Per Employee Ratio
- Operating Leverage
- EBIT vs EBITDA
- Capital Gains Yield
- Tax Equivalent Yield
- LTM Revenue
- Operating Expense Ratio Formula
- Overhead Ratio Formula
- Capacity Utilization Rate Formula
- Total Expense Ratio Formula
- Efficiency Ratios
- Dividend Ratios
- Debt Ratios
- Debt to Equity Ratio
- Debt Coverage Ratio
- Debt Ratio
- Debt to Income Ratio Formula (DTI)
- Capital Gearing Ratio
- Capitalization Ratio
- Interest Coverage Ratio
- Times Interest Earned Ratio
- Debt Service Coverage Ratio (DSCR)
- Financial Leverage Ratio
- Net Debt Formula
- Leverage Ratios
- Operating Leverage vs Financial Leverage
- Current Yield
Dividends per Share Formula
Before an investor calculates the dividend yield – stock, she needs to know dividend per share which we also call DPS.
Here’s the formula for dividends per share (DPS) –
Since this calculation is done after the dividend is being paid, an investor will only get to know the past records. For example, if an investor wants to know the DPS of a company, he will look at the data of the latest year and then follow along.
Example of Dividends per Share Formula
Let’s take a practical example to illustrate dividends per share formula.
Honey Bee Company has paid annual dividends of $20,000. The beginning outstanding stock was 4000 and the ending outstanding stock was 7000. Calculate DPS of Honey Bee Company.
In this example, we can go for simple average to find out the average outstanding shares.
- The beginning outstanding stock was 4000 and ending was 7000.
- Using the simple average, we get the average outstanding stock as = (4000 + 7000) / 2 = 11,000 / 2 = 5500.
- The annual dividends paid were $20,000.
Using the DPS formula, we get –
- DPS Formula = Annual Dividends / Number of Shares = $20,000 / 5500 = $3.64 per share.
Now, if we want to find out the dividend yield of the company, we can do so. We need to keep in mind that a lower DPS doesn’t mean that the company has no growth potential. We need to know the dividend yield and other financial measures to ensure whether the company has enough growth potential or not.
Explanation of Dividends per Share Formula
In this formula for Dividends per Share, the most important part is the “number of shares”. You can simply take the record of the beginning shares and the ending shares, and calculate the simple average of outstanding shares. Or else, you can go for weighted average.
You would see that in calculating earnings per share also we take the weighted average of outstanding shares. But the basic difference between the dividends per share and earnings per share is what we put in the numerator.
In DPS, we take annual dividends; and in the case of earnings per share, we use net income. The use of the weighted average method is true for those companies that pay dividend for the existing shares in January and issue new shares in December. You get the idea. Depending on an approach of a company, we may choose the calculation method.
Use of DPS Formula
Any investor would look at different stocks to find out in which she would invest in.
For that, the investor looks at different ratios. Only DPS may not provide the overall outlook of the company; but if an investor can look at different financial ratios along with dividend payout ratio, dividend yield, and DPS; she would have a solid understanding of the company.
If an investor sees that the dividend payout ratio of a company is lower; that means the company is re-investing more to increase the value of the company. Before an investor ever decides to invest; she needs to look at all the measures and find out a holistic view of company’s financial affairs.
As we see from above, Colgate has been consistently paying dividends over the years, however, companies like Amazon and Google haven’t paid any dividends yet.
Dividends per Share Calculator
You can use the following Dividends per Share Calculator
|Dividend per Share Formula =||
Dividends per Share in Excel (with excel template)
Let us now do the same example above in Excel.
This is very simple. You need to find the average outstanding shares using simple average formula. And then You need to provide the two inputs of Annual Dividends and Number of Shares.
You can easily calculate the ratio in the template provided.
First,we will go for simple average to find out the average outstanding shares.
Now, we will find out the dividends per share of Honey Bee Company.
You can download this DPS template here – Dividends per Share Excel Template
This has been a guide to Dividends Per Share, Formula for dividends per Share, uses, and examples. Here we also provide you with Dividends per share calculator along with excel template. You may also learn more about financial analysis from the following set of articles-
- Diluted EPS Calculation
- Basic EPS vs Diluted EPS
- Retention Ratio
- Earnings Per Share
- Dividend Payout Ratio Formula