Earnings Per Share vs Dividend Per Share

[MaxBombay]

I want to know what is the difference between

Earnings per share vs Dividend per share.

For example, let us take Reliance Industries Ltd balance sheet which can be found here on myiris.com.

http://myiris.com/shares/company/financial.php?cSelect=3&icode=RELINDUS

Book Value Per Share (Rs) 667.70 (31-Mar-2009) 526.40 (31-Mar-2008)
Earnings Per Share (Rs) 97.30 (31-Mar-2009) 134.20 (31-Mar-2008)
Dividend Per Share (Rs) 12.10 (31-Mar-2009) 11.20 (31-Mar-2008)

Can someone please explain:

1) If company have earning of rs.97.3 per share then why it issued only Rs.12.10 as dividend, where is the remaining Rs.109.4 profit?. Is it adjusted in book value of share?

2) If we consider current market value of stock which is Around Rs.1000 then it returned only 1.2% dividend on market price then why research companies are valuating stock at 10PE rather then 100PE? (actual dividend?)

I am confused, please suggest.

 

[columbus]

I want to know what is the difference between

Earnings per share vs Dividend per share.

For example, let us take Reliance Industries Ltd balance sheet which can be found here on myiris.com.

http://myiris.com/shares/company/financial.php?cSelect=3&icode=RELINDUS

Book Value Per Share (Rs) 667.70 (31-Mar-2009) 526.40 (31-Mar-2008)
Earnings Per Share (Rs) 97.30 (31-Mar-2009) 134.20 (31-Mar-2008)
Dividend Per Share (Rs) 12.10 (31-Mar-2009) 11.20 (31-Mar-2008)

Can someone please explain:

1) If company have earning of rs.97.3 per share then why it issued only Rs.12.10 as dividend, where is the remaining Rs.109.4 profit?. Is it adjusted in book value of share?

2) If we consider current market value of stock which is Around Rs.1000 then it returned only 1.2% dividend on market price then why research companies are valuating stock at 10PE rather then 100PE? (actual dividend?)
I am confused, please suggest.

1)EPS=Netprofit/shares.You can not expect a company to distribute all
net profit to shareholders. So it is 12.10 out of 97.3.

2)For a single individual it is 1.2% dividend,but there are millions.

 

[MaxBombay]

1)EPS=Netprofit/shares.You can not expect a company to distribute all
net profit to shareholders. So it is 12.10 out of 97.3.

2)For a single individual it is 1.2% dividend,but there are millions.

Thanks for your reply.

I understand, they will not distribute full dividend but where does remaining profit go? is it adjusted in book value of stock?

If company is actually paying out dividend of 1.2% then why brokerage houses consider EPS and not DPS ?. In simple terms, If I invest Rs.100 in something and its price is 10PE then I will expect it to give me Rs.10 dividend and not Rs.1.2. Can you please explain.

 

[abir das]

hi,
Reliance EPS is not 97/share.After issuing bonus its now around 48/49.

EPS only calculated on floating stocks on exchanges.but, dividend also given to promoters and non listed equity holders too like business partner.so, you cant expect dividend shuold be as good as eps or net profit.
My personal request to you that dont look at EPS OR PE ratio.just look at
RON. return on networth. if, u only belives in fundamental.
- abir das