Technicals Stability Returns
DPS or Dividend Per Share, is the amount that a company declares as a dividend for every ordinary or equity shareholder. Dividend Per Share is computed by dividing the total dividend paid by the company, including interim dividends, over a period of time (usually a year) by the total number of outstanding shares.
The formula to derive DPS
Dividend Paid - A dividend paid is the part company's earnings that is distributed to its shareholders.
Total Share Outstanding - The total number of shares issued and actively held by stockholders is known as shares outstanding.
Dividend Per Share indicates how much dividend is declare to company's shareholders on per share basis.
DPS is generally important for investors who are looking for fixed income from stock market.
Start Ups or growing companies are less likely to give dividends as they re-invest back into the business for growth and expansion.
Dividends is an amount that companies gives out to its shareholders for every share they hold, mostly companies gives dividends out of its profits (Net Profit). But there is no compulsion on companies, that they should pay dividends to its shareholders, Its all depends on companies boards of directors decision.
DPS is generally important for investors who are looking for fixed income from stock market. It is a crucial measure for investors since the amount of dividends a company pays out directly translates to shareholder income. It is the simplest calculation an investor can use to determine the dividend payments they will receive as a result of holding shares of a stock over time.
Dividend payments to shareholders could be a way for the company to convey a message. Typically, companies that pay dividends are established businesses with high prospects for their future profits. This raises the market value of the stock and makes it more appealing to investors.
Start Ups or growing companies are less likely to give dividends as they re-invest back into the business for growth and expansion.
A company's management may assume that current earnings growth may be sustained if DPS continues to increase over time.
The investor who want fixed income from stock market generally look for companies that pay consistent dividend. But there is no compulsion on companies regarding paying dividends to its shareholders and this decision is depends on boards of directors.
When analysing dividend per share, consider why the distributed dividend is higher or lower than the previous dividend. It could be due to an increase or decrease in stock price, or the company genuinely paying a higher dividend compared to previous year.
Dividend Per Share indicates how much dividend is declare to company's shareholders on per share basis. Even if a particular company is paying high dividends, it does not represents how profitable the company is, so we cannot look at only DPS before investing. To check financial performance of the company we must consider other factors that shows the company's financial condition such Net Income, Operating Income, EBITDA, Net Margin, ROIC, ROE, etc. With this you can also check TSR Stock Index to know technical as well as financial strengths of the company.
With Dividend Per Share other dividend related ratios like Dividend Payout Ratio which indicates percentage of the company's earnings paid out to the shareholders in the form of dividends, Dividend Yield measures the dividend paid by the company relative to stocks price and EPS measures how much money a company makes on a per share basis.
And most importantly while analysing DPS always look at historical data, consistent growth in Dividend Per Share is more important than high dividends, but keep in mind that to along with this growth in dividend the company's market value also should be growing.
