Dividend payout ratio

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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 ?
Overtime we expect to build to a regular dividend pay-out ratio in the order of 40%.
Lintner (1956) was the pioneer in studying the behavioural pattern of management in deciding dividend policy and his study revealed that management is usually conservative in nature; and dividend policy is largely based on the earnings of current year, as also the dividend pay-out of the previous year, and does not deviate largely from this.
Scottish Power was the only one of the "big six" to cut its dividend pay-out with a reduction from pounds 427 million to pounds 83 million.
Instead of the flat dividend pay-out given to most company shareholders, the scheme rewards the loyalty of long-standing customers.
- Dividend pay-out of 40% per year between 2018 and 2020.
Following the dividend pay-out for 2017 at close to 100% we have revised up our assumption regarding the dividend pay-out over 2018-2022 to 100% from 90%, which corresponds to about CZK0.3 billion per annum.
We assume that Canal's conservative financial policy, with a net debt cap at EUR1.2 billion, Net Debt to EBITDA below 4.0x and dividend pay-out between 50% and 80% commitments, will remain in place during the rating horizon or become stricter given the ample headroom against targets.
Global Banking News-October 27, 2014--Nigeria's central bank implements new rules on dividend pay-out
Ardshin's FCC ratio decreased to 15.3% at end-2017 from 16.8% at end-2016 after a large dividend pay-out relating to the Arexim acquisition and following loan growth.
2017 Results and Forecasts: Syngenta generated Fitch-adjusted FCF of USD1 billion in 2017 on the back of stable profitability, favourable working capital movements, and a lower dividend pay-out. Sales were marginally down on 2016 as a double-digit decline in LatAm Crop Protection was broadly offset by overall business growth in North America, EMEA and Asia Pacific.
Dividend pay-out ratios are high by international standards and the four banks propose to distribute between 70% and 75% of 2015's net income to shareholders.
The firm had put a hold on dividend pay-outs since 2008.