How to Calculate Dividends

Step-by-Step Guide

1. 1

   Step 1: Determine how many shares of stock you hold.

   If you're not already aware of how many shares of company stock you own, find out.
   
   You can usually get this information by contacting your broker or investment agency or checking the regular statements that are usually sent to a company's investors via mail or email. , Find your company's dividends per share (or "DPS") value.
   
   This represents the amount of dividend money that investors are awarded for each share of company stock they own.
   
   For a given time period, DPS can be calculated using the formula DPS = (D
   - SD)/S where D = the amount of money paid in regular dividends, SD = the amount paid in special, one-time dividends, and S = the total number of shares of company stock owned by investors.
   
   For this calculation, you can usually find D and SD on a company's cash flow statement and S on its balance sheet.
   
   Note that a company's dividend-payout rate can change over time.
   
   Thus, if you're using past dividend values to estimate what you'll be paid in the future, there's a chance that your calculation may not be accurate. , When you know the number of shares of company stock you own and the company's DPS for the most recent recent time period, finding the approximate amount of dividends you will earn is easy.
   
   Simply use the formula D = DPS multiplied by S, where D = your dividends and S = the number of shares you own.
   
   Remember that since you're using the company's past DPS value, your estimate for future dividend payments may end up differing somewhat from the actual number.
   
   For example, let's say that you own 1,000 shares of stock in a company that paid $0.75 per share in dividends last year.
   
   Plugging the appropriate values into the formula above, we get D =
   0.75 multiplied by 1,000 = $750.
   
   In other words, if the company pays about the same amount of dividends this year as it did last year, you'll make about $750. , If you're calculating the dividends for many different stock holdings, or if you're dealing with large numbers, the basic multiplication required to find the dividends you're owed can be laborious.
   
   In this case, using a calculator can be much easier.
   
   You may want to use the free calculator provided at the top of the article, or one of many online dividend calculators (like this one) which offer sophisticated options for calculating your dividends.
   
   Other types of calculators can be useful for accomplishing similar investment calculations.
   
   For instance, this calculator works backwards, finding DPS from the company's total dividends and your number of shares. , The process above is designed to work for relatively simple cases where the number of stocks owned is a fixed quantity.
   
   However, in real life, investors often use the dividends they earn to buy more shares of stock in a process called "dividend reinvestment." By doing this, an investor sacrifices a short-term dividend payout in favor of the long-term gains that can result from owning added shares.
   
   If you've arranged for a dividend-reinvestment program as part of your investment, keep an updated tally of shares you own so that your calculations will be accurate.
   
   For instance, let’s say you earn $100 per year in dividends from one of your investments and that you arrange to have this money reinvested into additional shares every year.
   
   If the stock trades at $10 per share and has a DPS of $1 annually, spending your $100 will get you ten more shares and another $10 in additional dividends per year, bringing your dividends to $110 in the next year.
   
   Assuming the stock’s price remains the same, you’ll be able to buy eleven more shares the following year, then about twelve the year after that.
   
   This "compounding" effect will continue as long as you let it, assuming the stock price remains stable or rises.
   
   This focus on dividends as an investment strategy has made some people rather wealthy, although, alas, there are no guarantees of spectacular results.
2. 2

   Step 2: Determine the dividends paid per share of company stock.

3. 3

   Step 3: Multiply the DPS by the number of shares.

4. 4

   Step 4: Alternatively

5. 5

   Step 5: use a calculator.

6. 6

   Step 6: Don’t forget to account for dividend reinvestment.

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