How to Calculate the Payout of a High Dividend Stock
- 1). Determine the trailing 12-month dividends per common share. This information may be in the management discussion section of quarterly and annual reports, which are usually available in the investor relations section of a company's website. You may also get the dividend per share amounts from press releases announcing the dividend payments. Add the amounts from the four most recent dividend declarations.
- 2). Get the trailing 12-month earnings per common share. For the current period, this information should be below the net income line in the income statement. Get the earnings per share for the remaining nine months of the year from the previous three quarterly reports.
- 3). Calculate the dividend payout ratio. Divide the trailing 12-month dividends per common share by the trailing 12-month earnings per share and express the result as a percentage. For example, if a company's trailing 12-month dividends and earnings are $1 and $2 per share, respectively, the dividend payout ratio is 0.50, or 50 percent.
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