<p>Dividend Per Share (DPS) is a financial metric that quantifies the amount of money a company pays out in dividends for each share of its common stock. It is calculated by dividing the total annual dividends paid by the number of outstanding shares.</p>

<h2>How It Works</h2>
<p>The formula for DPS is:</p>
<p><strong>DPS = Total Annual Dividends / Number of Outstanding Shares</strong></p>
<p>For example, if a company pays out $1,000,000 in dividends annually and has 1,000,000 shares outstanding, the DPS would be:</p>
<p><strong>$1,000,000 / 1,000,000 shares = $1 per share</strong></p>

<h2>Why It Matters</h2>
<p>DPS is a crucial metric for investors as it indicates the potential return on investment (ROI) from dividends. A higher DPS suggests that the company is distributing more of its profits to shareholders, which can be attractive to income-oriented investors. However, it's essential to consider other factors, such as the company's payout ratio (dividends as a percentage of earnings) and the sustainability of the dividend, to make informed investment decisions. For instance, a high DPS might not be sustainable if it significantly depletes the company's earnings, potentially leading to a dividend cut in the future.</p>