When a company earns profits, it can either decide to retain the same and invest it in the business or distribute the profits to the shareholders of the company. This distributed profit is called dividend. Dividend per share (DPS) is calculated as total dividend divided by total common shares. It represents the portion of a company’s profit that has been paid out to each outstanding common share of the company.
From the previous example, we have seen that common shares outstanding is 10,000 and the EPS is Rs.81.15. Suppose the company decides to pay 25% of its EPS as dividends, the DPS would be Rs.20.3 (81.15 * 25%).