What is Dividend Per Share?

Dividend per share is a measure of the dividend payout per share of common stock. The measure is used to estimate the amount of dividends that an income investor might expect to receive if he or she were to buy a company’s common stock.

The measure is especially effective when tracked on a trend line, since a consistent amount per share indicates management’s willingness to make consistent payouts to investors.

The dividend per share formula is as follows:


The denominator of the dividends per share formula generally uses the annual weighted average of outstanding shares. The weighted average is also used with the earnings per share formula. However, there are key differences between these two formulas. The numerator for earnings per share is net income, or earnings. The numerator for the dividends per share formula is dividends. Earnings is effectively a continuous process throughout the year whereas dividends are paid at a given moment.

For example, a business issued $10,000,000 of quarterly dividends in the past year, plus an extra one-time $2,000,000 special dividend. During that period, the business had a weighted average of 3,000,000 shares of common stock outstanding. Based on this information, its dividend per share is:

$12,000,000 Total dividends paid / 3,000,000 Shares = $4.00 Dividend per share

An argument can be made that special dividends should be excluded from the aggregation of dividends paid per year, if the intent is to project what the dividend per share will be in a future period. This is because there is no assurance that these special dividends will be issued again.

This measure is not commonly used by growth investors, who are more concerned with the intentions of a business to plow back funds into operations, thereby increasing the value of the company and the price per share.