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Optimize return of dividends based on payout per share
What you're referring to is the yield.  The issue with these sorts of calculations is that the dividend isn't guaranteed until it's declared.  It may have paid the quarterly dividend like clockwork for the last decade, that does not guarantee it will pay this quarter.   Regarding question number 2.  Yield is generally an after the fact calculation.  Dividends are paid out of current or retained earnings.  If the company becomes hot and the stock price doubles, but earnings are relatively similar, the dividend will not be doubled to maintain the prior yield; the yield will instead be halved because the dividend per share was made more expensive to attain due to the increased share price.   As for the calculation, obviously your yield will likely vary from the yield published on services like Google and Yahoo finance.  The variation is strictly based on the price you paid for the share.  Dividend per share is a declared amount.  Assuming a $10 share paying a quarterly dividend of $0.25 your yield is: Now figure that you paid $8.75 for the share. Now the way dividends are allocated to shareholders depends on dates published when the dividend is declared.  The day you purchase the share, the day your transaction clears etc are all vital to being paid a particular dividend.  Here's a link to the SEC with related information: https://www.sec.gov/answers/dividen.htm I suppose it goes without saying but, historical dividend payments should not be your sole evaluation criteria.  Personally, I would be extremely wary of a company paying a 40% dividend ($1 quarterly dividend on a $10 stock), it's very possible that in your example bar corp is a more sound investment. Additionally, this has really nothing to do with P/E (price/earnings) ratios.