Dividend Calculator

What is Dividend?

A dividend is a portion of a company's profits that is distributed to its shareholders. It's a way for the company to share its financial success with the owners of its stock.

Here's a simple example: Let's say you own shares in a company that manufactures EV vehicles. The company had a very good year and made a lot of profit from selling EV Vehicles. Now, the company has decided to give some of that profit back to its shareholders as a dividend.

So, if you own 10 shares in the company, and they decide to give a dividend of Rs 1 per share, you would receive Rs 10 in total (1 per share x 10 shares) as your dividend.

Dividends are a way for companies to reward their shareholders for investing in them. It's like getting a little bonus for being part of the company's success!

What is a Dividend Calculator?

A dividend calculator is a tool that helps you figure out how much money you'll receive from a company as dividends based on the number of shares you own and the dividend rate.

Here's how it works: You input the number of shares you own and the dividend rate (the amount of money paid per share), and the calculator does the math for you to show how much you'll receive in dividend payments.

For example, if you own 200 shares of a company and the dividend rate is 0.50 per share, the calculator will tell you that you'll receive 100 in total (0.50 x 200 shares) as dividend payments.

Why do Investors look out for dividend?

For many years in India, dividend-paying companies were the go-to choice for investors, especially when dividends were tax-free. This tax exemption made high-dividend companies extremely appealing.

Today, however, dividends are fully taxable at the individual’s applicable slab rate.

Additionally, according to Section 194S Of The Income Tax Rules, dividends above ₹10,000 in a financial year attract TDS. Despite these tax implications, dividend-paying stocks continue to remain attractive.

Here’s why: when a company distributes dividends, it signals that it is committed to rewarding shareholders since dividends are paid from profits. Unlike capital appreciation, which depends on market performance, dividends provide a more predictable source of income.

For investors, this creates a dual advantage: they earn steady dividend income while also holding ownership in the company’s stock.

Above all, dividends demonstrate that the company has healthy cash flows to support payouts. These three factors explain why investors still favor dividend-yielding stocks.

Different ways to look at dividend

There are 4 key ways to assess a company’s dividend metrics. Let’s break them down with an example.

Assume Company Y reports a net profit of ₹5.6 crore, and it has declared ₹1.4 crore in dividends to shareholders. It has 28 lakh outstanding shares, each with a face value of ₹10, and the stock currently trades at ₹410 per share.

Here’s how we interpret the data:
- Dividend Per Share (DPS) - ₹1.4 crore / 28 lakh shares = ₹5 per share
- Dividend Percentage - ₹5 (dividend per share) / ₹10 (face value) = 50% (This is more relevant for internal company reporting and compliance.)
- Dividend Payout Ratio - ₹1.4 crore / ₹5.6 crore = 25% (Tells you how much of the profits are distributed as dividends.)
- Dividend Yield - ₹5 / ₹410 = 1.22% (This is what investors typically look at.)

For investors, dividend yield is a crucial metric and that’s exactly what a dividend yield calculator helps compute.

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