Dividend per share definition

What is dividend per share?

Dividend per share shows how much of a company’s total dividend is paid out for each share that an investor holds. It can be used to show the expected annual dividend return on your investment - if the company pays one.

What’s a good dividend per share? 

You’d typically want a higher dividend per share, as this indicates that a company pays out more of its profit to shareholders on an annual basis. But, some investors are willing to accept a lower dividend if the company reinvests the money back into its business operations to encourage future growth. 

That’s because in the long term, this could result in a higher share price in the future and a higher potential return on their initial investment. 

How is dividend per share calculated? 

The dividend per share formula takes the total dividends paid by a company and divides it by the total number of shares the company has. It looks like this: 

Companies will often announce the total dividend paid just after it is paid to shareholders. You can find the number of shares in circulation by typing a company’s name, followed by ‘number of shares outstanding’ into a search engine. 

Here’s an example of how to calculate dividend per share. Let’s say a company has announced dividends of $1,000,000 have been paid out to customers, and the company has 2,000,000 shares in circulation. Using the formula, you’ll find that the dividend per share is $0.50.