Key Takeaways
- Dividends Per Share (DPS) = Total Dividends Paid / Shares Outstanding
- You can also calculate DPS by summing quarterly dividend payments over a year
- DPS is used to compute dividend yield, payout ratio, and coverage ratio
- Always use the same share count basis (basic or diluted) consistently when comparing metrics
To calculate dividends per share (DPS), divide the total dividends paid to common shareholders by the number of common shares outstanding. For example, if a company paid $8 billion in total dividends and has 4 billion shares outstanding, DPS = $8B / 4B = $2.00 per share. Alternatively, if you know the quarterly dividend rate, simply multiply by four: a $0.50 quarterly dividend equals $2.00 annual DPS.
DPS is one of the most fundamental metrics in dividend investing. It tells you exactly how much cash income each share generates per year. When you see that Coca-Cola (KO) has a DPS of $1.94, that means each share pays $1.94 in annual dividends. Own 1,000 shares and you collect $1,940 per year.
The DPS Formula
DPS = Total Dividends Paid to Common Shareholders / Weighted Average Shares Outstanding
When using total dividends from the cash flow statement, make sure to exclude preferred dividends if they are included in the total. The formula should only use dividends paid to common shareholders. If the cash flow statement shows "Dividends Paid: $10 billion" and footnotes indicate $200 million went to preferred shareholders, use $9.8 billion as your numerator.
For the denominator, use the weighted average shares outstanding (found on the income statement near EPS). This accounts for shares issued or repurchased during the year. Using basic shares outstanding from the balance sheet date can also work but may be less precise if share count changed significantly during the period.
Method 1: Sum of Quarterly Payments
The simplest way to determine DPS is to add up the four quarterly dividend payments declared during the year. Most U.S. companies pay quarterly, making this straightforward.
Example with Johnson & Johnson (JNJ):
- Q1: $1.19 per share
- Q2: $1.19 per share
- Q3: $1.24 per share (raised mid-year)
- Q4: $1.24 per share
- Annual DPS: $1.19 + $1.19 + $1.24 + $1.24 = $4.86
Notice that JNJ raised its dividend between Q2 and Q3. This is typical — most Dividend Aristocrats raise once per year, so the annual DPS includes two rates. Taking the latest quarterly rate and multiplying by four ($1.24 x 4 = $4.96) gives you the forward annualized rate, which may differ from the trailing annual total.
Method 2: From the Cash Flow Statement
If you want to calculate DPS from financial statements rather than press releases, find "Dividends Paid" in the financing activities section of the cash flow statement, then divide by shares outstanding.
Example with Microsoft (MSFT):
- Cash Flow Statement: Dividends Paid = $20.7 billion
- Weighted Average Shares Outstanding: 7.43 billion
- DPS = $20.7B / 7.43B = $2.79 per share
This method captures the actual cash paid during the fiscal year, which may differ slightly from the declared amounts if payment dates straddle fiscal year boundaries.
Method 3: From the Retained Earnings Rollforward
If the cash flow statement is not available, you can derive total dividends from the retained earnings equation:
Dividends = Beginning RE + Net Income - Ending RE
If retained earnings started at $100M, net income was $30M, and ending retained earnings is $120M, then dividends declared = $100M + $30M - $120M = $10M. Divide by shares outstanding to get DPS. Note: this method captures dividends declared, not dividends paid, and may include effects of stock buybacks if they were charged to retained earnings.
Trailing vs. Forward DPS
There are two common ways to express DPS, and the distinction matters for yield calculations:
- Trailing (TTM) DPS: The sum of dividends actually paid over the last 12 months. This is a historical, factual number. Example: KO paid $0.485 + $0.485 + $0.485 + $0.485 = $1.94 trailing DPS.
- Forward (Indicated) DPS: The most recent quarterly dividend multiplied by four (or the most recent monthly dividend multiplied by twelve). This projects the current rate forward and is used for forward yield calculations. If KO raises its next quarter to $0.515, forward DPS would be $0.515 x 4 = $2.06.
Most financial websites display forward DPS by default. When comparing DPS across companies or calculating yield, make sure you know which version is being used. Our stock pages on DividendRanks show both trailing and forward figures.
Using DPS in Other Calculations
DPS is a building block for several key dividend metrics:
- Dividend Yield: DPS / Stock Price. KO at $1.94 DPS and $60 price = 3.23% yield.
- Payout Ratio: DPS / EPS. If EPS is $2.50 and DPS is $1.94, payout ratio = 77.6%.
- Dividend Coverage Ratio: EPS / DPS. With $2.50 EPS and $1.94 DPS, coverage = 1.29x.
- Dividend Growth Rate: Compare DPS across years using the CAGR formula.
Frequently Asked Questions
What if a company pays special dividends — do I include them in DPS?
It depends on your purpose. For calculating trailing DPS as a historical fact, include all dividends paid including specials. For projecting future income or calculating a sustainable yield, exclude one-time special dividends since they are not expected to recur. Most financial data providers exclude specials from their forward DPS figures.
How do stock splits affect DPS?
After a stock split, both the share price and DPS are adjusted proportionally. If a company with a $2.00 DPS executes a 2-for-1 split, the DPS becomes $1.00 but shareholders own twice as many shares, so their total income is unchanged. Historical DPS figures are retroactively adjusted for splits to maintain comparability.
Is higher DPS always better?
Not necessarily. A high DPS relative to earnings (high payout ratio) may be unsustainable. And DPS alone does not account for the stock price — a $10 stock paying $1.00 DPS gives you a 10% yield, while a $200 stock paying $4.00 DPS yields only 2%. Compare DPS growth rates and payout ratios rather than absolute DPS figures when evaluating quality.