1. What is Dividends Per Share?

Dividends Per Share (DPS) is a financial ratio that measures the amount of dividends distributed to shareholders for each share of stock they own. It indicates how much money shareholders are receiving for each share they hold.

2. How Does the Calculator Work?

The calculator uses the DPS formula:

Where:

• \( \text{Earnings} \) — Company's total earnings or net income ($)
• \( \text{Dividend Payout Ratio} \) — Percentage of earnings paid as dividends (expressed as decimal)
• \( \text{Shares} \) — Total number of outstanding shares

Explanation: The formula calculates how much dividend income each shareholder receives per share they own based on the company's earnings and dividend policy.

3. Importance of DPS Calculation

Details: DPS is a key metric for investors evaluating income-producing stocks. It helps assess a company's dividend policy, financial health, and commitment to returning value to shareholders. Consistent or growing DPS often indicates a stable, profitable company.

4. Using the Calculator

Tips: Enter total earnings in dollars, dividend payout ratio as a decimal (e.g., 0.4 for 40%), and the total number of outstanding shares. All values must be positive numbers with payout ratio between 0-1.

5. Frequently Asked Questions (FAQ)

Q1: What is a good DPS value?
A: A "good" DPS depends on the industry and company. Generally, consistent or growing DPS over time is positive, while very high DPS might indicate unsustainable payout ratios.

Q2: How often is DPS calculated?
A: DPS is typically calculated quarterly when companies declare dividends, but annual DPS is also commonly used for analysis.

Q3: What's the difference between DPS and dividend yield?
A: DPS is the absolute dividend amount per share, while dividend yield is DPS divided by the stock price, expressed as a percentage.

Q4: Can DPS be higher than EPS?
A: No, because DPS comes from earnings. If a company pays more in dividends than it earns, it's using retained earnings or debt, which is unsustainable long-term.

Q5: Why do companies change their DPS?
A: Companies may adjust DPS based on earnings performance, cash flow needs, investment opportunities, or changes in dividend policy.