Shares that you own in a company give you equity in the company, or partial ownership of the company's profits. The more equity that you hold, the greater the percentage of the profits that you own. When the company sees a profit and chooses not to retain it for future investment, the company distributes the profits to stockholders in the form of dividends. You can calculate the size of your dividend from data on the statement of stockholders' equity.
Multiply the number of preferred shares that the company has issued by the dividend that the company has promised for each preferred share. For example, if the company has promised $15 for each of 1,200 preferred shares, multiply $15 by 1,200 to get $18,000.
Subtract this sum from the company's net profits. For example, if the country has a net profit of $200,000, subtract $18,000 from $200,000 to get $182,000. This is the profit that is distributed to common shareholders.
Divide the equity that you own in the company by the total equity that common stockholders own. For example, if you own 100 shares and the common stockholders own a total of 150,000 shares, divide 100 by 150,000 to get 0.00067.
Multiply this fraction by the profit that goes to common shareholders. Continuing the example, multiply 0.00066 by $182,000 to get $121.33. This is the value of the dividends that you will receive.
- Jupiterimages/Photos.com/Getty Images
- How to Calculate Increase in Retained Earnings
- How to Calculate the Annual Dividend on Preferred Shares
- How to Calculate Diluted Shares from Options
- How to Calculate the Book Value of a Preferred Stock
- How to Calculate Leverage Ratio
- How to Calculate a Payout Ratio with Negative Earnings
- How to Find the Value of Common Stock in Accounting
- How Dividends on Preferred Stock Affect the Computation of EPS