Dividend per share (DPS) refers to the amount of dividend a company distributes for each share of common stock owned by a shareholder. It is typically stated as a peso amount per share and represents the most direct expression of dividend income from a stock.
In practical terms, dividend per share answers a simple question for investors:
How many pesos do I receive for every share I own when a company pays dividends?
If a company declares a ₱1.50 dividend per share and an investor owns 1,000 shares, the investor is entitled to ₱1,500 in gross dividends.
Dividend per share is the figure most commonly cited in dividend announcements for dividend stocks on the PSE, making it the primary reference point for income-focused investors.
Understanding Dividend per Share in Practice
Dividend per share is derived from the total dividends a company decides to distribute, divided by the number of outstanding shares entitled to receive that dividend. While the calculation is straightforward, most investors rely on the officially declared DPS rather than computing it themselves.
For example, if a PSE-listed company declares a cash dividend of ₱0.80 per share, an investor holding 2,000 shares will receive ₱1,600 in gross dividends. Under Philippine tax rules, cash dividends from domestic corporations are subject to a 10% final withholding tax, which is automatically deducted. As a result, the investor receives ₱1,440 net, credited directly to their brokerage account on the payment date.
Dividend per share focuses on the income received per share, not the company’s total dividend payout. Two companies may distribute similar total dividend amounts, yet their DPS figures can differ significantly depending on how many shares are outstanding.
In the Philippine stock market, dividend per share is a widely used metric across dividend-paying sectors such as banks, utilities, holding companies, and REITs. Most local companies declare dividends annually, while some pay semi-annually or quarterly. Philippine REITs, in particular, rely heavily on DPS disclosures due to their income-oriented structure and regular payout schedules.
Dividends in the Philippines are generally peso-denominated and most commonly paid in cash. Stock dividends do occur but are less favored by investors seeking regular income. Because dividend per share is quoted on a gross basis, local investors typically adjust the figure mentally to account for the 10% withholding tax when estimating actual cash income.
Dividend per share is also a core input when investors compare dividend-paying stocks with alternative income instruments such as time deposits, government bonds, or money market funds, especially during periods of low interest rates.
Dividend per Share and Related Metrics
Dividend per share is closely related to dividend yield, but the two measure different things. DPS tells investors the peso amount they receive per share, while dividend yield expresses that amount as a percentage of the stock’s current market price.
A higher dividend per share does not automatically mean a better income investment. A stock with a high DPS but a very high share price may still offer a lower yield than a cheaper stock with a smaller DPS. This is why Philippine investors often examine DPS alongside dividend yield, payout ratio, and earnings stability rather than relying on a single metric. Investors seeking high-yield stocks look closely at both DPS and yield to identify shares that maximize income potential.
Dividend per share can also be declared in different forms. Cash DPS provides immediate income and is taxed, while stock DPS increases the number of shares owned but does not generate cash. Most income-focused investors prioritize cash dividends because they offer tangible returns without requiring the sale of shares.
Changes in Dividend per Share Over Time
Dividend per share is not fixed and can change from year to year. Adjustments may result from changes in company profitability, cash flow conditions, dividend policy, or shifts in the number of outstanding shares. While a stable or gradually increasing DPS is often viewed positively, it must be supported by sustainable earnings.
Investors should also understand that dividend per share influences stock prices. On the ex-dividend date, share prices typically adjust downward by approximately the dividend amount, reflecting the fact that new buyers are no longer entitled to the declared payout. Market sentiment and broader conditions, however, can affect the actual price movement.
Common mistakes among investors include focusing solely on high DPS figures without assessing sustainability, ignoring tax effects on actual income, assuming dividends are guaranteed, or equating dividend income with total investment return while overlooking capital gains or losses.
Common Questions About Dividend per Share
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Is a higher dividend per share always better?
Not necessarily. Exceptionally high DPS figures may be temporary or unsupported by earnings, increasing the risk of future dividend cuts. -
Are dividends guaranteed every year?
No. Dividends are not guaranteed and depend on company performance and board approval. -
Does dividend per share affect stock prices?
Yes. On the ex-dividend date, share prices typically adjust downward by approximately the dividend amount, reflecting the fact that new buyers are no longer entitled to the declared payout. -
Do all PSE-listed companies declare dividend per share regularly?
No. Many Philippine companies do not pay dividends, as they prioritize reinvesting profits for growth instead of distributing income.