What Is The Difference Between Earnings-Per-Share And Dividends-Per-Share?
The earnings-per-share ratio calculates how profitable a company is per share of its stock. It’s net income minus preferred stock dividends, divided by outstanding shares.If ABC Company has 20 million outstanding shares and a net income of $10 million, and it paid a $1 million dividend to preferred stock holders last year, its EPS is 45 cents. That’s $9 million divided by 20 million shares. Dividends-per-share measures the amount of dividends that shareholders receive on a per-share basis. It’s dividends paid out over a fiscal year minus any special dividends, divided by outstanding shares. If ABC paid $1 million in dividends and it had 5 million shares outstanding, its DPS is 2 cents per share. EPS shows a company’s profit by measuring its net income for each outstanding share. DPS figures the portion of earnings that is paid to each preferred shareholder.