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Dividend Payout Ratio

   Also found in: Acronyms 0.01 sec.
Dividend payout ratio
Percentage of earnings paid out as dividends.

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.


Dividend Payout Ratio

What Does Dividend Payout Ratio Mean?

The percentage of earnings paid to shareholders in dividends. It is calculated as follows:

Investopedia explains Dividend Payout Ratio

The payout ratio provides an idea of how well earnings support the dividend payments. More mature companies tend to have a higher payout ratio. In the United Kingdom there is a similar ratio that is known as dividend cover. It is calculated as earnings per share divided by dividends per share.

Related Terms:
Dividend
Earnings per ShareEPS
Ex-Date
Ex-Dividend
Record Date



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Accordingly, in light of full-year earnings that have surpassed initial estimates, the Company has decided to raise the year-end dividend payment as shown below in order to maintain the FY2005 consolidated dividend payout ratio.
For each firm we estimated a pre- and a post-TRA dividend payout ratio as the average of the quarterly payout ratios in the respective (pre- and post-TRA) period.
The dividend payout ratio stood at 90% in fiscal year 2003.
 
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