# How to calculate a dividend payment A dividend is a payment to the shareholders of the company's profits. Dividend payments vary, depending on the type of shares and the company's business strategy. Highly profitable companies that are strongly growth oriented can pay low dividends (or none) because the profits are reinvested. Other companies that are well established can pay higher dividends, especially in preferred stock. Any payment of dividends will depend on each company but as long as the company has benefits. It is easy to calculate a dividend payment, but there are several ways to do it.

You will need to:
• Calculator
Steps to follow:

#### one

Calculate the dividend payment to see how much you will receive based on the number of shares you have. Most dividends are paid quarterly, so you can do this calculation, either on an annual basis or quarterly basis.

#### two

Multiply the number of shares by the annual dividend to find out to what extent the dividend payment will be. For example, if you own 1, 500 shares of XYZ Corporation and the dividend is € 1.50 per share, the annual dividend payment is € 2, 250. Divide this figure by 4 to find the quarterly payment, which would be € 562.50.

#### 3

Discover the return on investment represented by a dividend payment . Yield is the annual percentage of your investment in the form of paid dividends. For example, if you paid € 20 per share and the dividend is € 1.50, your return is € 1.50 divided by € 20 (multiplied by 100 to get the percentage). The performance in this example is 7.5 percent. But if you paid € 150 per share, your return would be only 1.0 percent. The performance is important to value the investment.

#### 4

Calculate the dividend payment ratio . This is the dividend proportion of the company's net income. For example, if the company had a profit after tax of 25 million and paid 10 million in dividends, the dividend payment ratio is 25 million Euros divided by 10 million Euros, 2.5.

#### 5

Growth oriented companies often have high dividend payment rates, which indicates that they are withholding most of the net proceeds to invest in the expansion. Conversely, a low dividend payment ratio suggests that the company is not likely to grow much more. If a company has a high performance, it can still be a good investment if you are looking for income instead of capital growth.

#### 6

Calculate the dividend coverage. This is a variation of the proportion of payment dividends. This is not more than the profit per share divided by the dividend. For example, if the earnings per share are € 2.50 and the dividend is € 1 per share, the dividend coverage is 2.5.

#### 7

Dividend coverage is useful because it is often easier to find the income and dividend amounts per share than the net income and the total amount paid as dividends.

Tips
• Before making an investment in the stock market looking for a return via dividends, we recommend that you check with your bank or cashier, they are the experts.