An example
Let's say you just bought 100 shares of a preferred stock and want to know how much your quarterly dividend distributions will be. Upon reading the prospectus, you discover that the stock's par value is $25, and its dividend rate is 6.5%.
Converting the dividend rate to a decimal produces 0.065, and multiplying by the $25 par value gives us an annual dividend of $1.625 per share. (Note: While you can't actually use a fraction of a cent, it's a good habit to hold off rounding your numbers until the end of a calculation.)
Dividing this result by four produces a quarterly dividend of $0.40625 per share. Finally, multiplying by 100 shares gives a total quarterly dividend distribution of $40.63, rounded to the nearest cent.
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