They may be pennies, but dividends per share equate to rather a lot if a shareholding contains a large number of shares. Dividends are an important part of investment at this time of year, as many companies announce their full year results.

Oil firms BP and Royal Dutch Shell produced their figures a little while ago, and announced increased dividends of 5.28p and 15.64p respectively, to be paid in mid-March. To put things in context, bear in mind that you can buy nearly three BP shares for every Shell share.

The big banks are reporting, and that means big profits.

Of the premiership powerhouses, Barclays kicked off the season with a 15 per cent increase in profits to £5.28bn, equivalent to nearly £14.5m a day. The bank is owned by its shareholders though, who expect a share of the profits to be paid out to them for their investment. In the event, about a third of the profits are distributed.

Barclays has declared that shareholders will be given a dividend for the second half of last year of 17.4p a share, paid at the end of April. That represents an increase of about 10.5 per cent over the same final dividend paid last year. This rate of dividend increase, as well as the rate of increase in earnings, is important in obtaining a fair value for the share price.

Lloyds TSB reported figures last Friday, weighing in with a profit for last year of £3.82bn, up 10.7 per cent on the previous year's £3.45bn, despite accounting changes concerning bad debts.

The big attraction for investors in Lloyds TSB, before the recent takeover speculation, has been the very high dividend payout. Last year, Lloyds TSB paid out more than half of the pre-tax profit to its shareholders, and is expected to do so again this year.

Britain's second biggest bank, Royal Bank of Scotland, announces its full-year results this morning. Analysts are expecting to see a figure of about £8.2bn. One of the main reasons behind its success was acquiring NatWest at a snip six years ago.

Tomorrow sees HBoS announce its results. This is the combination of Halifax and Bank of Scotland. The group recently claimed to be the UK's largest long-term savings provider, with £1 in every £8 invested in new products. As well as being the UK's largest mortgage provider, the group claims to have a relationship with two out of every five households in the UK.

The UK's fourth largest bank has a very aggressive UK growth strategy, with the UK accounting for more than 95 per cent of profits. Its market capitalisation puts it close behind the third biggest, Barclays. In contrast, more than 40 per cent of Barclays' profits now come from its international portfolio.

But these outfits are mere minnows in comparison to the big fish of the UK banking sector, HSBC. Next Monday, HSBC reports final year results for 2005. Expectations are for a figure of £11.5bn, equivalent to £31.5m a day, or nearly £365 a second.

This may seem rather disconcerting from the point of view of the customer, but from an investor's point of view, what is the relevance of these banks making shed-loads of cash? The fact that profits increase means a higher share-out to the owners by dividend, making the shares more attractive to own. The banks account for nearly 20 per cent of the stock market.

* For investment advice contact Anthony Platts on 01642 608855.

Published: 28/02/2006