Small‐signal stability is an important task and key research in electrical engineering for networks. This research article focuses on the implementation of a multi‐objective approach for choosing an optimal location for Phasor Measurement Units (PMUs) to quantify a power system's small‐signal stability by maximizing the signal‐to‐noise ratio (SNR) in the system. The novelty of this research lies in the implementation of Dingo Optimization (DOX) technique along with the Prony Analysis (PA) approach for the assessment of small‐signal stability in standard grid networks. The voltage angle, amplitude and the range of frequencies are measured by the optimal placement of PMUs, which primarily focus on the multi‐signal PA. To achieve the objective of this research, DOX integrated with the multi‐signal PA approach is used to determine the ideal position for PMU placement by considering maximum redundancy and optimizing the signal to noise ratio to a maximum level. The effectiveness of the DOX strategy is established with improved accuracy and fewer disturbances by optimizing the electromechanical oscillations of the system. The implementation of the DOX approach for attaining the best value of the maximized SNR is obtained by analyzing a wide set of conditions, perturbations, and additive noise, which provides an accurate assessment of damping ratio (DR) and frequency (f) of electromechanical oscillations. Numerical results obtained from the standard IEEE test systems (14, 39, 57, 118, and 300 bus systems) are compared with the existing methods in the literature. The statistical indices demonstrate that under the highly limited optimization context selected, the intended optimizer functions satisfactorily.