Definition§
Gross Dividend Per Share refers to the total amount of dividends declared by a corporation over a given period (usually one fiscal year), divided by the number of outstanding ordinary shares. This financial metric offers investors a clear lens through which they can view the dividend performance of a stock, excluded of any deductions like taxes or other adjustments. It paints a vivid picture of what has been genuinely earned on each share before the hands of the tax man play their part.
Calculation§
To compute the Gross Dividend Per Share:
Where:
- Total Gross Dividends Paid is the sum of all dividends distributed by the company before any deductions.
- Total Number of Ordinary Shares refers to the average number of shares outstanding during the period in question.
Significance in Investing§
Understanding the Gross Dividend Per Share is like knowing the exact flavor profile of a fine wine before sipping—it prepares the palate, or in this case, the portfolio. This metric is crucial for investors as it:
- Assesses Dividend Consistency and Growth: Higher and growing Gross Dividend Per Share over time might indicate a company’s robust financial health and a potentially stable dividend policy.
- Facilitates Comparative Analysis: It allows investors to compare the dividend performance of different companies in a similar sector or market index, making it easier to spot the high-dividend yielders.
Practical Insights§
Imagine Gross Dividend Per Share as your financial morning coffee—something you’d want strong and consistent. A dip in this number might mean your coffee’s gone cold, signaling potential trouble brewing within the company’s dividend policy or financial stability. Keep an eye on this metric to ensure your investment keeps jolting you with positive surprises, not letdowns!
Related Terms§
- Dividend Yield: The dividend per share divided by the price per share. It’s like comparing the warmth of different blankets—the higher it is, the cozier the returns.
- Payout Ratio: The proportion of earnings paid out as dividends to shareholders. Think of it as the percentage of pie each shareholder gets; a slice too big and there might not be enough pie next time.
- Earnings Per Share (EPS): Net earnings divided by the number of outstanding shares. It tells you how much profit each share got earmarked with.
Further Reading§
- “The Little Book of Common Sense Investing” by John Bogle
- “The Intelligent Investor” by Benjamin Graham
- “Dividends Still Don’t Lie” by Kelley Wright
In essence, the Gross Dividend Per Share is more than just a number—it’s a beacon of shareholder value, serving as both a signal and a reassurance in the pursuit of investment prosperity. Keep it on your radar like the brightest star guiding your investment journey through the night sky.