Dividend payout ratio


Also found in: Acronyms.

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 ?
The variables included in this analysis are: dividend payout Ratio (DPR), sectoral economic growth (SG), ownership concentration (OWCEN), board Independence (BDIND), board size (BS), gross domestic product (GDP), interest rates (IR), and foreign direct investment (FDI).
The dividend payout ratio is ` 4/ ` 20x100 = 20 per cent.
The dividend payout ratio is Rs 4/Rs 20x100 = 20 per cent.
Our dividend payout ratio policy generally reflects that of a largely regulated utility.
With the completion of our decade-long Power the Future Plan and projected capital spending of $500 to $600 million per year post 2012, we believe that a modest increase in our dividend payout ratio is warranted," said Gale Klappa, chairman, president and chief executive of Wisconsin Energy.
11) Specifically, the mean dividend payout ratio of quintile 5 firms decreased from 1.
We anticipate the current economic recession will further impact community bank profitability and therefore want to ensure the dividend payout ratio is reasonable in relation to our profitability levels.
This increase is consistent with the previously announced change in the company's dividend payout ratio target from approximately 75% to approximately 80% of its adjusted diluted earnings per share, reflecting the company's intention to return a large amount of cash to shareholders in the form of dividends.
This action is consistent with the company's targeted dividend payout ratio of between 50 percent to 70 percent of earnings.
Partially offsetting these positive factors are the company's high dividend payout ratio and the limited growth in the company's insurance book.
NYSE: BLX) ("BLADEX" or the "Bank"), a specialized multinational bank established to finance trade in the Latin American and Caribbean region, announced today that its Board of Directors has approved a stock repurchase program, an increased dividend payout ratio and a plan to declare and pay dividends on a quarterly basis, rather than annually.
This healthy dividend increase reflects the confidence of our Board of Directors in our ability to generate strong cash flow that supports our objective of a 35 to 45 percent dividend payout ratio in addition to funding the current and future growth initiatives of Bemis' operations.