# How to Calculate the Annual Dividend on Preferred Shares

When it comes to dividends, owning preferred stock is like having VIP tickets to a concert. Dividends on preferred stock are typically fixed and are often higher than those on common stock. Preferred stockholders also receive their dividends before common stockholders, although a company might skip payments if profits are weak. If you own or are considering buying preferred shares, it’s important to know the annual dividend. This amount will likely make up the bulk of your returns because preferred shares typically don’t have the same potential for price increases that are associated with common shares.

Visit any financial website that provides stock information. In the stock quote text box, start typing the name of the company that issued the preferred stock, or its ticker symbol. On most websites, after you punch in a few letters, a drop-down list appears showing the company’s different stocks. Identify and click the desired preferred stock to bring up its quote.

Identify the preferred stock’s current market price and dividend yield percentage. This percentage represents the annual dividend as a proportion of the price. For example, assume a preferred stock has a market price of \$97.50 and a dividend yield of 7.18 percent.

Divide the yield percentage by 100 to convert it to a decimal. In this example, divide 7.18 percent by 100 to get 0.0718.

Multiply your result by the preferred stock’s market price to calculate its annual dividend. In this example, multiply 0.0718 by \$97.50 to get a \$7 annual dividend.

Multiply the annual dividend by the number of shares you own or are considering buying to figure the total annual dividends you would receive. Concluding the example, assume you are considering buying 50 shares. Multiply 50 by \$7 to get \$350 in total annual dividends.

#### Tips

• A company might split up a preferred stock’s annual dividend into quarterly or semiannual payments.
• If you can’t find a preferred stock’s price and yield on a financial website, check with your broker.

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