Dividend per Share (DPS)

Formula

Dividend per Share (DPS) = Total Ordinary Dividends Paid / Number of Ordinary Shares Outstanding

Where:

Total Ordinary Dividends = Cash dividends declared for ordinary shareholders

Ordinary Shares Outstanding = Number of ordinary shares entitled to dividends

Preference dividends are excluded because DPS focuses only on ordinary shareholders.

Explanation

Dividend per Share measures the cash dividend received by each ordinary share.

It shows how much profit is distributed to shareholders rather than retained in the business.

A higher DPS indicates:

• Strong cash position
• Shareholder-friendly dividend policy
• Stable earnings

A lower or zero DPS may indicate:

• Profits are retained for expansion
• Cash flow constraints
• Losses or conservative dividend policy

Satisfactory Level

There is no fixed “ideal” DPS. A satisfactory DPS:

• Is consistent or growing over time
• Is supported by earnings and cash flows
• Matches the company’s dividend policy and growth strategy

Investors often prefer stable dividends rather than high but irregular dividends.

Industry Norms (General Guidance)

DPS varies significantly by industry and company maturity.

Industry	Typical DPS Pattern
Utilities	High and stable DPS
Banking & Finance	Moderate, consistent DPS
Manufacturing	Moderate DPS
Technology	Low or no DPS
Start-ups / Growth firms	Usually no DPS

⚠️ DPS should always be analysed together with EPS and Dividend Payout Ratio.

Example

Modern More Berhad

• Total Ordinary Dividends Paid: RM200,000
• Ordinary Shares Outstanding: 1,000,000 shares

Step: Calculate DPS

DPS = 200,000 / 1,000,000 = RM0.20

Interpretation:

Each ordinary shareholder receives 20 sen per share as dividend for the year.

Summary

• DPS measures actual cash return to shareholders
• A company can have high EPS but low DPS (retained earnings)

Always assess DPS with:

• EPS
• Dividend Payout Ratio
• Cash flow from operations