I wanted to understand whether dividend is included in EPS.
For example. take PFE http://finance.yahoo.com/q?s=PFE its (anual) dividend today is 1.2, while its EPS is 1.11. Does it means that PFE share more dividends than what it earns?
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EPS is often earnings/diluted shares. That is counting shares as if all convertible securities (employee stock options for example) were converted. Looking at page 3 of Q4 2015 Reissued Earnings Press Release we find both basic ($1.13) and diluted EPS ($1.11). Dividends are not paid on diluted shares, but only actual shares.
If we pull put this chart @ Yahoo finance, and hovering our mouse over the blue diamond with a "D", we find that Pfizer paid dividends of $0.28, $0.28, $0.28, $0.30 in 2015. Or $1.14 per share. Very close to the $1.13, non-diluted EPS. A wrinkle is that one can think of the dividend payment as being from last quarter, so the first one in 2015 is from 2014. Leaving us with $0.28, $0.28, $0.30, and unknown.
Returning to page three of Q4 2015 Reissued Earnings Press Release, Pfizer last $0.03 per share. So they paid more in dividends that quarter than they made. And from the other view, the $0.30 cents they paid came from the prior quarter, then if they pay Q1 2016 from Q4 2015, then they are paying more in that view also.
The EPS is noted as
ttm, which means trailing twelve months --- so the earnings are taken from known values over the previous year.
The number you quote as the dividend is actually the Forward Annual Dividend Rate, which is an estimate of the future year's dividends.
This means that PFE is paying out more in the coming year (per share) than it made in the previous year (per share).
No, dividends are not included in earnings. Companies with no earnings sometimes choose to pay dividends. Paying the dividend does not decrease earnings. It does of course decrease cash and shows up on the balance sheet. Many companies choose to keep the dividend at a fixed rate even while the business goes through cycles of increased and decreased earnings.