Gross Dividend Per Share

The term “Gross Dividend Per Share” (GDPS) refers to the total amount of gross dividends a company pays over a given fiscal year, divided by the total number of ordinary shares that have received the dividend. Gross dividends are the total payout before any taxes or deductions.

Key Components

Gross Dividends: The total amount of dividends declared and paid by the company to its shareholders.
Ordinary Shares: Common equity shares of a company, which are eligible to receive dividends.

Formula

The formula for calculating Gross Dividend Per Share is:

\[ \text{Gross Dividend Per Share} = \frac{\text{Total Gross Dividends Paid}}{\text{Total Number of Ordinary Shares}} \]

Examples

Example 1:
A company declares gross dividends amounting to $500,000 in a financial year. If the company has 1,000,000 ordinary shares, the computation of GDPS is: \[ \text{GDPS} = \frac{500,000}{1,000,000} = $0.50 \] Thus, the Gross Dividend Per Share is $0.50.
Example 2:
If another company announces gross dividends totaling $1,500,000 and has 3,000,000 ordinary shares on which the dividends are paid, the GDPS will be: \[ \text{GDPS} = \frac{1,500,000}{3,000,000} = $0.50 \] Similarly, the Gross Dividend Per Share is $0.50.

Frequently Asked Questions

Q: What is the significance of Gross Dividend Per Share?
A: Gross Dividend Per Share offers an indication of the earnings returned to shareholders and helps investors gauge the return on their equity investments.

Q: How does GDPS differ from Net Dividend Per Share?
A: GDPS represents dividends before any taxes or deductions, while Net Dividend Per Share accounts for withholding taxes and other deductions.

Q: Can Gross Dividend Per Share fluctuate annually?
A: Yes, GDPS can fluctuate based on the company’s profitability, dividend policy, and number of outstanding shares.

Q: Is a higher GDPS always better?
A: While a higher GDPS generally signals strong profitability and shareholder returns, investors should also consider the company’s reinvestment strategy and overall financial health.

Dividend Yield: A financial ratio that shows how much a company pays out in dividends relative to its stock price.
Payout Ratio: The proportion of earnings a company pays to its shareholders in the form of dividends.
Earnings Per Share (EPS): A company’s profit divided by the number of outstanding ordinary shares.
Net Dividend: Dividends after taxes or any other deductions.

Online Resources

Suggested Books for Further Studies

“The Intelligent Investor” by Benjamin Graham
“Common Stocks and Uncommon Profits” by Philip Fisher
“Security Analysis” by Benjamin Graham and David L. Dodd
“Principles of Corporate Finance” by Richard A. Brealey, Stewart C. Myers, and Franklin Allen
“Financial Statements: A Step-by-Step Guide to Understanding and Creating Financial Reports” by Thomas Ittelson

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Gross Dividend Per Share