Dividends give you a taste of a company’s profits and line your wallet with extra cash. A company pays dividends in order to distribute a portion of its earnings to shareholders. You might receive these payments quarterly, semi-annually or at some other interval, but a company is not obligated to pay dividends. If a company chooses to share the wealth, every share outstanding is qualified to receive dividends. Shares outstanding are those that investors currently own that the company has not repurchased. You can calculate a company’s outstanding shares using information from its balance sheet.
Find a public company’s most recent balance sheet, which is filed as part of a company's quarterly report, called a Form 10-Q, or in the company's annual report, called a Form 10-K. You can download these reports from the investor relations section of a company’s website or from the U.S. Securities and Exchange Commission’s online EDGAR database.
Identify the number of common shares issued, listed in the shareholder’s equity section of the balance sheet. Issued shares are those that a company has sold to investors. For example, assume a company has one million common shares issued.
Locate the number of shares of treasury stock, listed in the same section of the balance sheet. Treasury stock is typically issued by a company and subsequently repurchased from shareholders. These shares don’t qualify for dividends because the company would be paying the dividend to itself. That would be like withdrawing money from your bank and depositing it into the same account. Continuing with the example, assume the company has 200,000 shares of treasury stock.
Subtract the number of shares of treasury stock from the number of common shares issued to determine the number of shares outstanding that qualify for dividends. Concluding the example, subtract 200,000 from 1 million to get 800,000 shares outstanding.
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