Dividend payout ratio

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Dividend payout ratio

Percentage of earnings paid out as dividends.

Dividend Payout Ratio

In fundamental analysis, the opposite of the plowback ratio. That is, the dividend payout ratio is a company's dividends paid to shareholders expressed as a percentage of total earnings. A higher ratio indicates that a company pays more in dividends and thus reinvests less of its earnings into the company. Whether or not this is desirable depends on the rate of growth; investors tend to prefer a higher payout ratio in a slow-growing company and a lower one in a fast-growing company.

dividend payout ratio

Dividend payout ratio.

You can calculate a dividend payout ratio by dividing the dividend a company pays per share by the company's earnings per share. The normal range is 25% to 50% of earnings, though the average is higher in some sectors of the economy than in others.

Some analysts think that an unusually high ratio may indicate that a company is in financial trouble but doesn't want to alarm shareholders by reducing its dividend.

References in periodicals archive ?
Anil, Kanwal and Sujata Kapoor (2008) in their research paper titled "Determinants of dividend payout ratios--A study of Indian Information Technology sector" published in International Resource Journal of Finance and Economics have tried to identify various factors like profitability , cash flows etc which influence the dividend payout ratio in Information Technology sector in India in the current scenario.
The relative stability of dividends coupled with the volatility of earnings resulted in the erratic pattern of dividend payout ratios displayed in Exhibit 1.
1982) Growth, Beta and Agency Costs as Determinants of Dividend Payout Ratios.
Forward-looking statements include, among other things, statements concerning management's expectations and projections regarding dividend payouts, dividend payout ratios and capital expenditures.
Although dividend payouts are generally smaller for repurchasing firms, as compared to their industry peers, the dividend payout ratios increase once the stock buyback program is over.
Offsetting these positive rating factors are the consistently high expense ratios--which are approximately 60%--and heavy dividend payout ratios during the last five years.
Offsetting these positive rating factors are the consistently high expense ratios of approximately 60% and heavy dividend payout ratios during the past five years.
All statements other than historical fact contained in this press release, including without limitation statements regarding rent or interest to be received from the Company's operators, the ability of a new operator to continue operations of a facility, plans with respect to individual facilities, expectations with respect to the specific terms and renewals of leases of the Company's facilities, the Company's anticipated dividend payout ratios, the Company's liquidity position, projected expenses associated with maintaining individual properties, the Company's ability to realize the recorded amounts of its investments and the potential effect of new or existing regulations on the operations conducted at the Company's facilities, are forward-looking statements.
While the Board recognizes and agrees that dividend payout ratios must be lowered as competition increases, we believe that a measured, consistent process for lowering that ratio, by increasing the earnings of the Company, is the most beneficial to our shareholders.
Negative factors include the high level of dividend payout ratios to its parent.
He said many dividend payout ratios in the industry are already high and dividend growth is likely to decline compared with recent years.
Fitch sees potential for rating action, citing the most probable causes as declining margins and increased subscriber incentives in the wake of aggressive competition, debt-funded M&A activity, high or increased dividend payout ratios and the failure to improve credit protection measures in response to the continuing tough market conditions.