In the preferred stock formula Vps=D/Kps, what does D represent?

In the preferred stock valuation formula ( V_{ps} = \frac{D}{K_{ps}} ), the variable ( D ) represents the fixed dividend. Preferred stock typically provides investors with a set dividend payment that does not fluctuate with the company's earnings, making it similar to a bond in terms of its cash flow.

Investors analyze this fixed dividend to determine the value of the preferred stock by dividing the expected dividend by the required rate of return for that type of investment, which is represented by ( K_{ps} ). Since the preferred dividend is fixed and known, it is a crucial component in evaluating the overall value of the investment. Therefore, understanding that ( D ) is the fixed dividend is essential for assessing the valuation of preferred stock and making informed investment decisions.