Dividend and Rate of Dividend – Definition, Formula, Examples | How to Calculate Dividend and Dividend Rate?

Students who are in search of the Dividend and Rate of Dividend examples can get them on this page. The profit which a shareholder gets for its investment from the organization is known as a dividend. Know what is dividend and what is rate of dividend from here. Let us discuss in detail the dividend and rate of dividend like definitions, formulas, procedures on how to calculate dividend, dividend rate, etc. So, refer to our page to improve your math skills and also to gain good marks in the exams.

Dividend and Rate of Dividend – Definitions

Dividend plays an important role in starting a business or company. The share of the annual profit of a company shared among its shareholders is known as a dividend. The rate of dividend is expressed as a percentage of the face value is called the rate of dividend.

Difference Between Dividend Rate Vs. Dividend yield

Dividend and dividend rates both are not the same. The dividend rate is the amount of share that is obtained from the shareholders such as mutual funds, stock market, etc. Whereas the dividend is the share of the profit among the shareholders.

Dividend and Rate of Dividend Formulas

  • Dividend Rate = Divided per share/current price
  • Dividend Yield = Dividend per share/ Market value per share

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How to Calculate Dividend Rate?

The estimation of the dividend rate of a venture, asset, or portfolio includes duplicating the latest intermittent dividend installments by the number of installment periods in a single year.

Dividend and Rate of Dividend Question and Answers

Example 1.
130 shares of Rs 30 each paying 10% dividend.
Number of shares = 130
Price of each share = 30
Therefore, total investment = Rs(30 × 130) = 1300
Dividend = 10%
Hence annual income = 10×1300/100 = 130

Example 2.
40 shares of Rs 200 each available at Rs 35 and playing 6% dividend.
Number of shares = 50
Price of each share = 200
Face value of 40 shares = Rs( 200 × 40) = 8000
Dividend = 6%
Hence annual income = 6 × 8000/100 = 480

Example 3.
180 shares of Rs 50 each paying 15% dividend.
Number of shares = 180
Price of each share = 50
Therefore, total investment = Rs(50 × 180) = 9000
Dividend = 15%
Hence annual income = 15×9000/100 = 1350

Example 4.
70 shares of Rs 60 each available at Rs 65 and playing 4% dividend.
Number of shares = 50
Price of each share = 60
Face value of 70 shares = Rs( 60 × 70) = 4200
Dividend = 4%
Hence annual income = 4 × 4200/100 = 168

Example 5.
260 shares of Rs 60 each paying 2% dividend
Number of shares = 260
Price of each share = 60
Therefore, total investment = Rs(60 × 260) = 15,600
Dividend = 2%
Hence annual income = 2×15,600/100 = 312

FAQs on Dividend and Rate of Dividend

1. What is the rate of dividend?

The dividend rate is expressed as the percentage or yield, which is a financial ratio that shows how much a company pays out in dividends each year relative to its stock price. The dividend payout ratio is one way to assess the sustainability of a company’s dividends.

2. What is the difference between dividend rate and dividend yield?

The dividend rate is another way to say dividend, which is the dollar amount of the dividend paid on a dividend-paying stock. The dividend yield is the percentage relationship between the stock’s current price and the dividend currently paid.

3. What is the dividend rate per share?

Dividend per share is the sum of declared dividends issued by a company for every ordinary share outstanding. DPS is calculated by dividing the total dividends paid out by a business, including interim dividends, over a period of time, usually a year, by the number of outstanding ordinary shares issued.

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