Calculate Dividends: The Big List of Dividend Formulas

**This is a post “in-progress.” New formulas will be added, when possible, until it is completed.

Dividends are a simple concept. However, there are a lot of questions regarding their calculation.

This post attempts to answer most of those questions. If you’re wondering “how to calculate dividend _?”, the answer is probably here.

These answers are pretty straightforward, so little or no explanation is provided. Make sure you know your mathematics order of operations.

The different facets of dividend calculation are listed in alphabetical order.

Keep in mind that the same dividend calculation can have several different names.

Amount, Amount per share, Forward, Annualized, Annual, Annual dividend per share

Most recent dividend (per share) × annual frequency of dividends

The dividend amount you see when looking at a stock quote.

Example:
$.22 dividend per share
4 payments (quarterly)
= $.22 × 4
= $.88

Amount from dividend yield, Amount based on yield

Current dividend yield × current stock price

Use the dividend yield to calculate the annual dividend per share

Example:
0.59% dividend yield
$149.83 current stock price
= .0059 × 149.83
= $.88

Keep in mind that dividend yields aren’t as up-to-date as share prices.

After tax

Dividend amount (or yield) × (1 – marginal tax rate)

How much of your dividends you get to keep after taxes.

Example (dollars):
$.88 dividend amount
15% marginal tax rate
= .88 × (1 – .15)
= $.748

Example (yield):
.59% dividend yield
15% marginal tax rate
= .0059 × (1 – .15)
= .5015%

APY

(1 + (dividends received ÷ stock purchase price)) ^ (365 ÷ days held) – 1

The annualized yield realized after receiving dividends over a period of time.

Example:
$7.76 dividends received
$75.55 stock purchase price
773 days held (2 years, 43 days)
= (1 + (7.76 ÷ 75.55)) ^ (365 ÷ 773) – 1
= (1.10271 ^ .47219) – 1
= .0472, or 4.7%

Annual income, Benefits

Annual dividends per share × number of shares

Amount of dollars in dividend income you received/can expect over the course of a year.

Example:
$.88 annual dividends per share
1,000 shares
= .88 × 1,000
= $880

Basis for reinvestment, Cost basis for dividend reivestment plan

Total dividend reinvested ÷ number of shares purchased

The price at which dividends are reinvested via a DRIP.

Example:
$17.53 total dividend amount
.917 number of shares purchased
= 17.53 ÷ .917
= $19.1182

From balance sheet, Yield from balance sheet, Cash flow, Declared, Paid

This years’ net profit + last years’ retained earnings – this years’ retained earnings

(Dividend from balance sheet ÷ shares outstanding) ÷ share price

Using the balance sheet and income statement to determine the total amount of dividends paid to shareholders.

Example (dollars):
$1,343,000 this years’ net profit
$9,105,000 last years’ retained earnings
$6,896,000 this years’ retained earnings
= 1,343,000 + 9,105,000 – 6,896,000
= $3,552,000

Example (yield):
$3,552,000 dividend from balance sheet
871,000 shares outstanding
$213.19 share price
= 3,552,000 ÷ 871,000
= $4.08
= 4.08 ÷ 213.19
= 1.9%

Cover, Coverage ratio

Earnings per share ÷ dividend per share

The number of times a company could (theoretically) pay dividends to common stockholders with current earnings.

Example:
$7.36 earnings per share
$4.08 dividend per share
= 7.36 ÷ 4.08
= 1.80

Compound

Dividend amount × total number of shares purchased via DRIP

The contribution of dividends received from shares purchased via reinvestment.

Example:
$4.08 dividend amount
2.105 shares purchased via DRIP
= 4.08 × 2.105
= $8.59

CAGR

((Current dividend amount ÷ beginning dividend amount) ^ (1 ÷ years the stock has been owned)) – 1

The annualized growth rate of a dividend.

Example:
$4.08 current dividend
$3.64 beginning dividend amount
3 years the stock has been owned
= ((4.08 ÷ 3.64) ^ (1 ÷ 3)) – 1
= .039 (3.9%)

Cash per share, dividends per share (common)

(Total cash dividends – preferred dividends) ÷ shares outstanding

Per-share cash dividends paid by a company to common stockholders.

Example:
$12,690 total cash dividends
$1,600 preferred dividends
3,087.4 shares outstanding
= (12,690 – 1,600) ÷ 3,087.4
= $3.59

Discount model

Expected dividend amount ÷ (equity cost of capital – expected dividend growth rate)

Performing stock valuation using the present value of all future dividends.

Example:
$4.28 expected dividend
7% equity cost of capital
5% expected dividend growth rate
= 4.28 ÷ (.07 – .05)
= $214.00

DRIP

Investment value with dividend reinvestment – investment value without reinvestment

The additional return received due to reinvestment of dividends. Investment value depends on shares purchased, dividends paid, stock price appreciation, dividend growth, and time held.

Example:
$27,000 investment value with dividend reinvestment
$23,000 investment value without reinvestment
= 27,000 – 23,000
= $4,000 (+17.4%)