Dividend Per Share (DPS): Definition, Calculation, and Why It Matters

What is DPS?

Dividend per share (DPS) is the cash dividend a company pays for each ordinary share outstanding over a given period (typically a quarter or year). It is a direct measure of the income a shareholder receives from owning a share.

Key takeaways

• DPS = total dividends paid to ordinary shareholders (excluding one‑time special dividends) divided by ordinary shares outstanding.
• A steady or rising DPS often signals stable earnings and management’s commitment to returning cash to shareholders.
• DPS is an absolute dollar amount; to compare income potential across stocks, use dividend yield (DPS ÷ share price) and payout ratios.
• Use weighted‑average shares if the share count changed during the period.
• Exclude special, one‑time dividends; include interim and regular dividends.

How to calculate DPS

Formula:
DPS = (D − SD) / S

Where:
* D = sum of dividends declared and paid during the period (quarter or year)
* SD = special, one‑time dividends in the period (exclude these)
* S = ordinary shares outstanding (use weighted average if shares changed)

Steps:
1. Add all regular and interim dividends for the period.
2. Subtract any special (one‑time) dividend amounts.
3. Divide by the number of ordinary shares outstanding (weighted average if applicable).

Example

If a company paid $237,000 in dividends last year, which included a $59,250 one‑time dividend, and had 2,000,000 shares outstanding:
DPS = ($237,000 − $59,250) / 2,000,000 = $0.09 per share

Practical considerations

• Stock splits and share consolidations change the share count; use adjusted dividends or per‑share figures that account for these events when comparing historical DPS.
• If a company issues new shares mid‑period, use the weighted average share count (same approach as EPS).
• Special dividends are omitted because they are not expected to repeat.

Related metrics and models

• Dividend yield = DPS / current share price. Useful for comparing income potential across stocks.
• Payout ratio = total dividends / net income (or payout ratio = DPS / EPS when using per‑share figures). Shows what portion of earnings is paid out as dividends.
• Retention (plowback) ratio = 1 − payout ratio; it measures the portion of earnings retained for growth.
• Dividend Discount Model (DDM) values a stock as the present value of expected future dividends. DPS (most recent dividend) is often an input into DDM valuations.
• Dividend aristocrats are companies in the S&P 500 that have increased dividends for at least 25 consecutive years—indicators of long‑term dividend reliability.

What counts as a “good” DPS?

DPS itself is an absolute dollar amount and must be interpreted relative to a stock’s price and the investor’s goals. More useful benchmarks:
* Dividend yield: many investors consider a yield between about 2% and 6% to be attractive, depending on sector and risk tolerance.
* Payout ratio: a moderate payout ratio (neither too low nor unsustainably high) suggests dividends are likely to continue.

Taxes on dividends

Tax treatment depends on jurisdiction and dividend type:
* Qualified dividends (U.S. context) are typically taxed at preferential long‑term capital gains rates (0%, 15%, or 20% depending on income).
* Nonqualified dividends are taxed at ordinary income rates.
Check local tax rules for exact treatment and thresholds.

Conclusion

DPS gives a clear, per‑share measure of the cash a company returns to owners. Use it together with dividend yield, payout and retention ratios, and company fundamentals to assess dividend reliability and income potential. Steady or rising DPS—especially when supported by sustainable earnings and cash flow—can be a strong indicator of shareholder‑friendly management.