Certain business organizations need to raise money from the public. A company may need money to start a business or to start a new project. The sum of money required is called capital. The required capital is divided into small equal parts, and each part is called a share. A person who purchases shares of the company becomes a shareholder of the company. The part of the annual profit of a company distributed among its shareholders is called a dividend.
Dividends are payments from companies to their shareholders, usually either in the form of cash or additional stock. Cash dividends are paid based on the number of shares you own, so if you own 100 shares, you will receive 100 times as much from a dividend as someone who owns one share of the stock.
Dividend per share (DPS) is the sum of declared dividends issued by a company for every ordinary share outstanding. The figure is calculated by dividing the total dividends paid out by a business, including interim dividends, over some time by the number of outstanding ordinary shares issued. To calculate dividend yield, all you have to do is divide the annual dividends paid per share by the price per share. For example, if a company paid out out $5 in dividends per share and its shares currently cost $150, its dividend yield would be 3.33%.