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.

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References in periodicals archive

A firm should have a target payout ratio and periodically adjust the payout toward the target 3.56 0.82 3.73 5.

Focus on dividend practices of Omani firms questionnaire survey findings

Starting from the classical Lintner (1956) model, which describes current dividends as partial adjustment of last year's dividends toward a target payout ratio, we modify the standard partial adjustment specification to investigate the effect of a change in regulatory policy on firms' dividend behavior.

Dividend policy in regulated network industries: evidence from the EU

State Street, which has taken advantage of volatility in Europe before, also expressed its commitment to returning capital to shareholders, with plans for a stock buyback with a target payout ratio in the range of 20-25%.

-State Street eyes deals in Europe

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.

Uralsib - Phosagro - Key Takeaways from Site Visit- Oct 28 , 2011

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

Relevance of signaling and smoothing approaches to dividend: a study of Indian IT sector

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 50.8%, in contrast to the implied target payout ratio from column 1 of 61.1%.

Dividend policy inside the multinational firm

"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., 1995, p.24).

Dividend policy behaviour in the Jordanian capital market

After giving serious consideration to both an established target payout ratio and the existing payout ratio, managers adjusted dividends to reflect the change in "permanent" earnings.

A tax motivation for smoothing dividends

If the surplus persists, it may gradually increase its target payout ratio.]

The role of internal financial sources in firm financing and investment decisions

The dividend policy sets a target payout ratio of at least 25% of X5's net profit, provided that the company's net debt-to-EBITDA ratio is below 2.0x (2017: 1.7x).

Fitch Upgrades X5 to 'BB+'; Outlook Stable