It is the amount the shareholder will receive as dividend for each share held. It is Total dividends paid/Shares Outstanding. Also known as DPS
Here the dividends include only "Ordinary" dividends. Any special dividends paid must not be taken in the numerator.
And if there is any fresh issue/ buy back of shares, then weighted average of shares outstanding should be taken in the numerator.
This Dividend per share can be used to know the rate of return for a shareholder from a particular stock. Company's dividend paying trend can be determined by analyzing the DPS over a period of time.
The company can positively signal the market by paying dividends every year at an increasing rate. Any drop in the DPS will give a negative signal that the growth prospects for the company are bleak.
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