Enter the annual dividend and the current stock price into the calculator to determine the cost of the preferred stock.

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## Cost of Preferred Stock Formula

The following equation is used to calculate the cost of preferred stock.

CPS = DPS / PPS *100

- Where CPS is the cost of preferred stock (%)
- DPS is the dividends per share
- PPs is the current price per share ($)

## Cost of Preferred Stock Definition

The cost of preferred stock is defined as the rate of return required by the holder of a company’s preferred stock.

## Cost of Preferred Stock Example

How to calculate a cost of preferred stock?

**First, determine the dividends per share.**Calculate the dividends per share on an annual basis.

**Next, determine the current share price.**Calculate the current price per share.

**Finally, calculate the cost of preferred stock.**Calculate the percentage of return required on the preferred stock using the equation above.

## FAQ

**What is a preferred stock?**

Preferred stock is a type of stock holding of a company that has a priority claim over the company’s profits and net assets. That is the preferred stock is paid out first from profits