How do I calculate dividends per share?

How do you calculate the cash dividends per share to be received?

• The information available: Co ABC paid cash dividends of 140000 in 2009; 65000 in 2010 and intends to pay 700000 in 2011. I need to calculate the amount of cash dividends per share to be received in 2011 with the following information: Each of these are separate problems: 25000 shares of common; 100,000 shares if 5 percent; $40 par cumulative preferred 25000 shares of common; 50000 of 5 percent, $40 Noncumulative Preferred 25000 shares of common; 60000 of 5 percent, $100 par cumulative preferred. I need to know HOW we get these answers.

• Answer:

  When a preferred stock is cumulative, it means that if the dividends paid in a particular year aren't enough to pay all of the preferred stock dividends, there will be an amount still 'owed' to the preferred shareholders. That amount is carried forward to the following year, and will be the first dividends paid, assuming the company pays any at all. In problem 1, the preferred stock should receive the first $200,000 of dividends (100,000 shares x $40 x 5%). Since only 140,000 were paid, that entire amount went to the preferred shareholders, and 60,000 is still owed. The first 60,000 paid in 2010 went towards this, and the remaining 5,000 was part of the preferred dividend for 2010. This left 195,000 still owed to the preferred shareholders. In 2011, the preferred shareholders will receive 395,000 (the 195,000 from 2010 and 200,000 for 2011) and the common stockholders will receive 305,000 in 2011. In the other second problem, the preferred stock is noncumulative. That means that the preferred stockholders would receive UP TO the first 100,000 of dividends (50,000 shares x $40 x 5%). Any amount over that would go to the common stockholders. If less than $100,000 in dividends are paid in a given year, the preferred stockholders would receive the entire amount, but nothing would be carried over to the next year (i.e., noncumulative) The third problem is the same as the first - any amount owed to the preferred shareholders would be carried over to the following year.