Dividends is the amount of money returned to the company’s shareholders, paid out of its profits. A company’s dividend stream can be used to value the company.
Dividend per share
The dividends per share is the total dividend paid out by the company divided by the number of common outstanding shares.
The dividend yield is the dividend per share divided by the price per share of the company.
In general, if a company increases its dividends paid per share, the stock price of the company will increase. Similarly, if a company cuts back on its dividends, one can expect the stock price of the company to fall.
Read: Interest Cover