- What is DPS?
- What is the formula for calculating DPS?
- How is DPS different from EPS?
- How to find out about the company’s DPS in Rahevard?
What is the concept of DPS?
DPS stands for Dividend Per Share and means a percentage of EPS that is distributed among shareholders. Since each of the stock companies licensed to operate on the stock exchange follows their own policies in the distribution of profits, therefore, DPS is different in different companies.
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Some companies distribute a larger percentage of their dividends among their shareholders, and some others distribute a smaller percentage of their dividends among their shareholders and spend most of it to provide the liquidity needed for the company’s development plans. Regarding planning for EPS and how to pay DPS to shareholders, decisions are made in the company’s general meeting. In order to fully familiarize yourself with these concepts, we suggest that you participate in the Academy’s fundamental analysis course.
DPS calculation formula
You can use the following formula to calculate DPS:
Calculate DPS using EPS
To calculate the cash dividend on a company’s stock, knowing its EPS, you can use the formula DPS = EPS x DPR.
In the formula above, DPR stands for Dividend Payout Ratio. The dividend payout ratio is the ratio of total dividends paid to shareholders compared to the company’s net income. This ratio is, in fact, a percentage of the company’s net income that has been paid to shareholders in the form of profit.
What is the difference between DPS and EPS?
According to the law of the stock exchange organization, companies admitted to the stock exchange must distribute at least 10% of the company’s annual EPS in the form of accumulated profit and at least 10% of it in the form of cash profit among their shareholders. Whether a company distributes, keeps, increases capital or spends the rest of the EPS in another direction is determined by the shareholders themselves and according to the company’s policies in the annual general meeting.
Therefore, EPS is the generated earnings per share and DPS is the diluted cash earnings per share. In fact, DPS is a part of EPS and most of the time the company’s DPS value is lower than its EPS value. Because companies often prefer to keep some of their profits and, depending on the circumstances, use it for development plans or meeting the needs of the company.
◊ Be sure to read this article: What are the differences between EPS and DPS?
What factors affect the paid DPS?
There are many factors that may affect the distribution of profits by a company. Among these things, we can mention the payment of debt, the need for growth or the company’s profit distribution policies. Since DPS is a part of the profit earned by the company, the news of its increase is considered positive because it shows the company’s confidence in its growth and profitability.
The increase in profit also indicates that the company no longer sees a growth opportunity for itself, and instead of investing the profit in the purchase of new equipment, it distributes it to its shareholders. Reinvestment of profit and payment of company’s debts are also among the things that indicate the reduction of DPS.
DPS is paid to which shareholders?
DPS is awarded to shareholders who are shareholders of the company at the time of the annual general meeting. Even if a person sells his shares the day after the meeting, DPS will still be awarded to him. This means that it doesn’t matter if the shareholders buy the company’s shares a few days before the meeting or sell their shares a few days after the dividend distribution.
When is DPS paid?
According to the rules approved in the stock exchange, if the dividend is approved in the annual general meeting of a company, that company is obliged to pay DPS to the shareholders within 8 months from the date of approval.
How to receive cash dividends per share?
It is possible to receive cash dividends per share in the following two ways, which are different depending on the conditions of the company:
1. Referral of the shareholder to a specific bank
In this case, the company in question signs a contract with one of the banks to pay the dividends to the shareholders by that bank. In such a situation, the shareholder can receive the dividend of each share assigned to him by visiting the bank in person. Therefore, the shareholder should go to one of the bank branches with his national card, a copy of his national card and stock exchange code.
2. Deposit to the bank account defined in Sejam
Today, the condition of receiving a stock exchange code is registration and authentication in the Sejam system. Among the information requested from the applicants in the process of registration in the Sejam system is the introduction of a bank account in the name of the shareholder. This facilitates the process of receiving cash dividends and many companies deposit their cash dividends to the bank accounts of their shareholders, which are introduced in Sejam.
How to view DPS of companies on Rahvard site?
The DPS payment process of joint-stock companies is such that if the dividend is approved in the general meeting of each of these companies, that company will publish the terms and time of DPS payment in a notice so that the shareholders can receive the cash dividend of their shares on the appointed date. do To access these announcements, you can refer to Kodal’s announcement header after entering the Rahvard website.
Another way to view the dividend payment notice of a listed company is to search for the trading symbol name of that company in the top box of the page after entering the website. After entering the page of that symbol, select the notification option from the reports menu and among the available notifications, look for a notification titled “dividend payment”.
Also, another way to know the details of the DPS of a stock company is to select the DPS option from the basic menu after entering the symbol page you want on the website. After clicking on this option, you can access DPS paid by the company in different financial years.
How to know the DPS amount of companies and its payment method
To know the amount of DPS of each stock exchange company and its payment method, you can contact the stock affairs of your desired company. Also, as we mentioned in the previous section, another way to know the details of the DPS of a joint stock company is to access the announcements published by that company regarding the payment of cash dividends by visiting the Revard website. It should be noted that in these notices, the details of the DPS payment, including the amount and method of payment, are also stated.
DPS or cash dividend means a percentage of EPS or earnings per share that is distributed to shareholders. Since each of the stock companies licensed to operate on the stock exchange follows their own policies in the distribution of profits, therefore, DPS is different in different companies.
According to the law, companies are required to distribute at least 10% of the company’s annual EPS in the form of retained earnings and at least 10% in the form of cash dividends to their shareholders. The decision on how a company will spend its remaining EPS is made by the shareholders and according to the company’s policies in the annual general meeting. To learn more about these concepts, we suggest you read the fundamental analysis training article.