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 ?
Mahira Rafique (2012) in his research paper titled "Factors affecting dividend payout: Evidence from listed non financial firms of Karachi Stock Exchange" published in Business Management Dynamics have tried to study the influence of factors like earnings, firm size, growth, profitability, corporate tax and financial leverage on dividend payout ratio for 6 years from 2005 to 2010 with reference to non financial firms listed in the Karachi Stock Exchange.
Dividend payout ratio: The dividend payout ratio was calculated by the following equation
There is a relationship between transaction cost theory and dividend payout ratio.
In first stage regression, GDP annual growth is regressed on lagged GDP annual growth rate, dividend payout ratio, annual interest rate, foreign direct investment annual growth rate, ownership concentration, board size and board independence.
ABB's dividend payout ratio fell from 67 per cent in 2011 to 35 per cent in 2012, though the dividend per share rose from ` 2 to ` 3 on the back of a two- and- a- half- time increase in profit after tax or PAT.
ABB's dividend payout ratio fell from 67 per cent in 2011 to 35 per cent in 2012, though the dividend per share rose from Rs 2 to Rs 3 on the back of a two-and-a-half-time increase in profit after tax or PAT.
The Dividend Payout Ratio and the Total Payout Ratio variables are censored at 0 from below and at 1 from above with the mean value of 0.
Commenting on the redemption, Michael Maturo, Reckson's Chief Financial Officer, stated, "The redemption of our remaining outstanding preferred stock with newly issued common equity, will further strengthen our balance sheet, create additional financial flexibility and improve our dividend payout ratio.
Thus we hypothesize that the higher the float the greater the outside control and the higher the dividend payout ratio.
The goal should be to committing long term to maintaining a comfortable total dividend payout ratio.
Today's dividend increase reflects Altria's intention to return a large amount of cash to shareholders in the form of dividends and is consistent with Altria's dividend payout ratio target of approximately 80% of its adjusted diluted earnings per share.
The company said that for the full year 2017, its common stock dividend payout ratio approximated 33% based on the reported 2017 earnings per share (EPS) of USD0.