Wondering how to calculate the dividend per share of a stock? In this video we will explain what is dividend per share and how you can calculate the dividend per share of any stock easily.

Wondering how to calculate the dividend per share of a stock? In this video we will explain what is dividend per share and how you can calculate the dividend per share of any stock easily. So let\\\’s jump right in.

How do you feel when you get an unexpected surprise from your parents or family? You feel happy, right? Similarly, \\\”dividend declared\\\” these two words are a pleasure for an investor. And why not! It is an unexpected gift on an investment and also is tax free. One of the best times for a shareholder in a company is when the company pays its cash dividend or stock dividend. For example if a company pays a cash dividend of rupees one per share and a shareholder own suppose thousand shares so eventually the dividend that is received by an investor is rupees thousand. But if a company pays a ten percent stock dividend then a shareholder who has thousand shares will get an additional 100 shares. So that is what a stock dividend is. To understand dividend per share we first need to understand what dividend is. So dividend is that part of the profit that the company shares with its shareholders. It means getting a part of the return on an investment made in the company and this return is usually in the form of money. Dividends are important for shareholders as it forms the basis of additional income. A company\\\’s dividend is decided by its board of directors. Now, it is not at all obligatory for the company to pay off dividends. Some years it may pay dividend on the other years it may decide not to pay dividend. Now, there is no guarantee that it will continue or will pay in the same proportion. One of the best-known companies Berkshire Hathaway owned by Warren Buffet has in fact paid dividend only once in 50 years. Still it has given great returns to its shareholders. Dividend can be either paid annually or quarterly now you must be thinking of why do companies pay dividend at all? Well paying dividends timely shows the positive financial health of the company. Companies having excess cash reserves generally pay dividends to attract their investors interest in the stock. Usually, mature companies distribute high dividends while growing companies concentrate more on reinvesting purposes and therefore may pay less dividend or no dividend at all. Dividend per share as the name suggests is the total dividend divided by the outstanding shares. Calculating dividend per share is very easy. The dividend per share is an important metric as it allows the investor to determine the amount of cash they will get on the basis of shares they hold. Dividends are a type of income for shareholders, especially for those who are looking for steady source of income or are retiring. However young investors who may not require the income can put those dividends by reinvesting them for portfolio growth.

If you are looking for dividend income then one of the financial metric you should see is the dividend yield. What is dividend yield? Dividend yield is shown as a percentage term. It is calculated by dividing the annual dividend per share by the current market price.