How To Calculate Dividends (2024)

You can find the income and earnings from the company's balance sheet and income statement.

The balance sheet shows the company’s assets and liabilities. It also reveals the company’s retained earnings — the total company earnings that haven't been returned to its shareholders through dividends.

The income statement shows the company’s annual net earnings. It also shows how much the company has earned during a given year if they had decided not to pay any dividends.

When calculating the dividend for a given year, subtract the retained earnings at the start of the year from the year-end figure. What's left is the net change in retained earnings for that year.

So let's say a company starts the year with $10M in retained earnings, and $30M at the end. It also earns $50M in net profits for the year.

Using the formula above, here's the math:

Step 1: $30M - $10M = $20M retained earnings

Step 2: $50M annual income - $20M retained earnings = $30M paid in dividends.

Investors can take this one step further and divide the $30M by the total number of outstanding shares, also found on the balance sheet, to calculate the dividends per share.

Other ways to find a company’s total dividends include calculating the company’s dividend yield and dividend payout ratio.

How To Calculate Dividends (2024)


How To Calculate Dividends? ›

The dividend per share would simply be the total dividend divided by the shares outstanding. In this case, it is $500,000 / 1,000,000 = $0.50 dividend per share.

How to calculate dividend amount? ›

The dividend per share is calculated using a simple method. To calculate DPS, divide the entire number of dividends paid by the company by the total number of shares held. The annualised dividend is the total amount of dividends given out during the year.

How is dividend rate calculated? ›

Dividend Rate Formula

The dividend rate can be described as the amount of cash received by a shareholder, divided by the market value of the stock held by that shareholder. On a per-share basis, the dividend rate is the amount of annual dividend per stock, divided by the current price of the stock.

What is the formula for calculating dividend income? ›

The formula to calculate dividend yield is a fairly simple one, and you don't need any special math or financial training to be able to do it for any dividend stocks you own. All you have to do is divide the annual dividend by the current stock price, and you'll get the dividend yield.

How are dividends calculated for dummies? ›

A dividend yield is one of the ways investors determine if a stock is profitable. To find it, divide the stock's annual dividend by its current share price. So, if a stock is trading at $100 and its annual dividend per share is $5, the dividend yield is 5%.

What is an example of a dividend? ›

What Is an Example of a Dividend? If a company's board of directors decides to issue an annual 5% dividend per share, and the company's shares are worth $100, the dividend is $5. If the dividends are issued every quarter, each distribution is $1.25.

What is a good dividend per share? ›

What Is a Good Dividend Yield? Yields from 2% to 6% are generally considered to be a good dividend yield, but there are plenty of factors to consider when deciding if a stock's yield makes it a good investment.

What does 7% dividend yield mean? ›

The dividend yield is a financial ratio that tells you the percentage of a company's share price that it pays out in dividends each year. For example, if a company has a $20 share price and pays a dividend of $1 per year, its dividend yield would be 5%.

Is dividend rate the same as interest rate? ›

Dividend Rate = Interest you earn as a dividend, typically over one year. This is a straightforward measure that doesn't compound interest. For credit unions, the Dividend Rate essentially functions as the interest rate to give you an idea of the annual return on your deposit.

What is a good dividend rate? ›

What Is a Good Dividend Yield? Yields from 2% to 6% are generally considered to be a good dividend yield, but there are plenty of factors to consider when deciding if a stock's yield makes it a good investment.

Is the dividend rate monthly? ›

The dividend rate is an annual rate of return used to calculate daily and monthly earnings for a savings account. Given as a percentage based on the account balance, this rate is active on the savings account, accruing interest daily based on the average daily balance, and compounding monthly.


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