John Hughman replies: Earnings per share (EPS) are in all cases calculated on a post-tax basis and dividends are usually paid out of post-tax profits. EPS and dividend per share (DPS) are different figures, and it is quite possible for dividends to exceed earnings, as they can be paid out of earnings retained from periods of strong profitability.
The yields we refer to may mean different things depending on the context. In our results tables, the dividend is calculated based on dividends declared in respect of the financial periods under discussion. The tables include the ex-dividend date upon which shares must be held to qualify for the payment, and the date on which the dividend will be paid.
On a full-year table the yield calculation is simply the full-year dividend divided by the current share price. On a half-year table, the annualised yield is calculated by subtracting last year’s half-year dividend from the last full-year dividend and adding the latest half-year dividend.
In the case of Stobart, this means subtracting the last half-year’s 9p dividend from the 18p full-year dividend and adding the latest 9p half-year dividend, for annualised total dividends of 18p, and then dividing this by the share price of 207p – giving a historic yield of 8.7 per cent.
Where we discuss a prospective yield, this will be based on brokers’ forecasts – and indeed, the forward yield we refer to in the tables that accompany our tips are based on a forecast dividend looking a year or two ahead.
