Dividend Per Share (DPS) is the total dividends a company pays out over a period (usually a year), divided by the total number of outstanding shares. The formula is DPS = Total Dividends Paid / Total Outstanding Shares. It tells you the income you earn per share you own. To make this process effortless, we have built a dividend calculator on our website where you can quickly calculate your total dividend payout using either the dividend yield or the dividend per share.
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What is Dividend Per Share (DPS)?
Dividend Per Share (DPS) is the amount of money a company pays out in dividends for each single share of its stock. If a company announces a DPS of ₹10, it means you will receive ₹10 for every share you hold.
It’s a direct measure of the return you get on your investment, purely from dividend income. Unlike dividend yield (which is a percentage), DPS is a straightforward rupee (or dollar) amount, making it easy to understand exactly what you’ll be paid.
Why is Calculating Dividend Per Share Important?
Knowing how to calculate and interpret DPS is a fundamental skill for any investor. Here’s why:
- Track Company Health: A stable or consistently growing DPS often signals a company is profitable and confident about its future cash flows.
- Compare Investments: It allows you to compare the direct dividend income from different companies. For example, is a ₹20 DPS from Company A better than a ₹15 DPS from Company B? (Spoiler: Not always, which we’ll explain later).
- Forecast Your Income: By knowing the DPS and how many shares you own, you can accurately forecast your future dividend income.
- Assess Payout Sustainability: By looking at DPS over time alongside earnings, you can gauge if the company can afford to keep paying its dividend.
The Dividend Per Share Formula
The formula for calculating Dividend Per Share is straightforward:
Dividend Per Share (DPS) = Total Dividends Paid / Total Number of Outstanding Shares
Let’s break down the two components:
- Total Dividends Paid: This is the total sum of money a company decides to distribute to all its shareholders during a specific period, typically a fiscal year. This figure can be found in the company’s annual report or financial statements.
- Total Outstanding Shares: This is the total number of shares of a company’s stock that are currently held by all its shareholders.
Step-by-Step Calculation Example
Let’s make this real with an example. Suppose a company called “Stable Growth Ltd.” reports the following for the financial year:
- Total Dividends Paid: ₹50,00,00,000 (50 Crore Rupees)
- Total Outstanding Shares: 2,00,00,000 (2 Crore Shares)
Now, let’s calculate the DPS:
- Identify the numbers: Total Dividends = ₹50,00,00,000; Outstanding Shares = 2,00,00,000.
- Apply the formula: DPS = ₹50,00,00,000 / 2,00,00,000
- Calculate the result: DPS = ₹25
This means for every share of Stable Growth Ltd. you own, you will receive a dividend of ₹25 for that year. If you own 100 shares, your total dividend income would be 100 shares × ₹25 = ₹2,500.
DPS vs. Dividend Yield: What’s the Difference?
Many beginners confuse DPS with Dividend Yield. While they are related, they are not the same.
| Feature | Dividend Per Share (DPS) | Dividend Yield |
|---|---|---|
| What it is | The absolute rupee amount paid per share. | The annual dividend income as a percentage of the current stock price. |
| Focus | “How much will I get per share?” | “What is the return on my investment at this price?” |
| Calculation | Total Dividends / Outstanding Shares | (Annual DPS / Current Stock Price) × 100 |
Example to Illustrate:
Let’s take our previous company, Stable Growth Ltd., with a DPS of ₹25.
- If the current stock price is ₹500, the Dividend Yield is (₹25 / ₹500) × 100 = 5%.
- Now, consider another company, “Volatile Tech Ltd.,” with a DPS of ₹40 but a stock price of ₹2000. Its Dividend Yield is (₹40 / ₹2000) × 100 = 2%.
Even though Volatile Tech has a higher DPS (₹40 vs. ₹25), Stable Growth offers a higher yield (5% vs. 2%) because its stock price is lower. This is why looking at both metrics is essential.
Use Our Free Dividend Calculator
Manually calculating your potential income for multiple stocks can be time-consuming. To simplify your life and your investment planning, we have built a dividend calculator on our website where you can calculate your total dividend payout using either the dividend yield or the dividend per share.
Simply input the numbers, and our tool will instantly compute your expected income, making portfolio analysis quick and easy.
Frequently Asked Questions (FAQs)
Q1: Where can I find a company’s Dividend Per Share?
You don’t always need to calculate it yourself. A company’s DPS is readily available on most financial websites (like MoneyControl, Screener.in), stock trading apps (like Groww, Zerodha), and in the company’s official annual report.
Q2: Is a higher DPS always better?
Not necessarily. A very high DPS can sometimes mean the company isn’t reinvesting enough money back into the business for future growth. The key is consistent and sustainable growth in DPS over time.
Q3: How often is DPS paid?
DPS is typically announced on an annual basis, but companies can pay it out quarterly, semi-annually, or annually. The annual DPS is the sum of all dividends paid during the year.
Q4: Can DPS be negative?
No. A company can decide to pay a dividend of zero, but it cannot pay a negative dividend.
Conclusion
Calculating Dividend Per Share is a fundamental skill that empowers you to make informed investment decisions. By understanding how to find or calculate DPS, you can accurately estimate your income, compare companies, and build a portfolio that aligns with your financial goals.
Remember, while a high DPS is attractive, it should be considered alongside other factors like the company’s earnings, payout history, and overall financial health. And for quick calculations, don’t forget to use our online dividend calculator to streamline your research process. Happy investing