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    yespiriqueta's Avatar
    yespiriqueta Posts: 1, Reputation: 1
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    #1

    Apr 16, 2007, 02:12 PM
    Retained earnings and dividend yield
    How do I calculate for retained earnings, dividends per share and dividend yield?
    Stas3000's Avatar
    Stas3000 Posts: 4, Reputation: 2
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    #2

    Jun 2, 2007, 01:48 PM
    I hope I understand your question...

    First, retained earnings is net income that a company retains for use in the business. From GAAP (Generally Accepted Accounting Principles perspective), net income, which is found on an income statement, can be spent on paying dividends to holders of the stock (owners) and then reinvesting back into the business or reinvesting back into the business altogether without paying any dividends. The companies that want to grow often don't pay dividends, but those that are quite established and want to please stockholders, do so, usually about $1 per share annually. By the way, retained earnings are found under Owners' Equity (or Shareholders' Equity) on the balance sheet.

    Dividends per share are calculated by simply dividing the total amount of cash a company wants to spend on dividends by the number of shares outstanding, i.e. the shares that are being traded on the market and held by investors. That's where $1 (or whatever) per share come from. If a company has 200,000 shares of stock and $300,000 to pay out as dividends, the declared dividend is $1.5 per share.

    Lastly, dividend yield is the amount of $$ paid in dividends divided by a stock price. See Investopedia for more info.
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