Target payout ratio

Target payout ratio

A firm's long-run dividend-to-earnings ratio. The firm's policy is to attempt to pay out a certain percentage of earnings, but it pays a stated dollar dividend and adjusts it to the target as base line increases in earnings occur.

Target Payout Ratio

The dividend that a publicly-traded company attempts to pay to shareholders each year as a percentage of its total earnings in a given year. There is no guarantee that the company will be able to pay the target payout ratio; if its earnings are particularly low in a year, it may pay a smaller percentage or even no dividend at all. It is important to note that even if the target payout ratio remains the same, the actual dividend may differ as earnings change each year and the payout ratio is a percentage rather than a dollar amount. See also: Omitted Dividend.
References in periodicals archive ?
Our sustainable strategy and our continued profitable growth in 2014 give us the confidence to do both, further increase the dividend by 10% and amend our dividend policy to a target payout ratio of more than 35% to highlight that the higher dividend is meant as a sustainable rather than a one-time effort," said Luka Mucic, CFO at SAP.
In future, the dividend policy will be put on a broader footing and the current practice of linking it to a target payout ratio will come to an end.
The company plans to distribute higher cash flows to shareholders with a medium-term target payout ratio of 20-40% of IFRS net income, with dividends being paid several times a year.
The target payout ratio of a firm depend on factors like growth and earning prospects of a particular company; the average cyclical movement of investment opportunities; working capital requirements; and internal fund flows judged by past experience; the relative importance attached by management to long-term capital gain as compared with current dividend income for its stock holders; its access to the capital markets on favorable terms, and company policies with respect to use of outside debt
The estimated coefficients on aggregate affiliate net income and aggregate lagged dividends reported in column 2 imply that parent firms with zero leverage have a target payout ratio of 50.
Emerging market firms often do have a target payout ratio like their developed country counterparts, but they are generally less concerned with volatility in dividends over time and, consequently, dividend smoothing over time is less important" (Glen et al.
t] = nominal earnings, and [Gamma] is the target payout ratio.
Amgen's management stated a target payout ratio of more than 60%, which does not deviate significantly from prior payouts made solely through share repurchases.
Further, this target payout ratio can be achieved with the company's attempts of moderating its capital expenditure levels at Southern California Edison.
Amgen's management stated a target payout ratio of 60%, which does not deviate significantly from prior payouts made solely through share repurchases.
Today's decision to increase the cash dividend a second time in 2012 moves the dividend payout ratio considerably closer to the Board of Director's long-term target payout ratio of between 50 and 60 percent of sustainable IDACORP earnings," stated LaMont Keen, IDACORP President and Chief Executive Officer.
where c is the adjustment factor, r is the target payout ratio and p is the hypothesized incremental change in the target payout ratio as a result of the TRA.