Dividends normally are described on a per share basis. For instance, a dividend payment may be 10 cents per share. This terminology makes it easy for investors to see how much of the company’s profits are paid out and how much are retained by the company to reinvest in its core business. So a company that has earnings per share of 50 cents for a given year and pays out 25 cents per share in dividends is passing half of its profits to shareholders and retaining the rest.

Bryan Perry

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