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 ?
The major finding of their study was that a company with higher internal ownership structure tends to give less divided and institutional investors tend to demand higher dividend pay-out ratio.
Dividend pay-out ratio was considered a measure of the company paying dividend.
After conducting the factor analysis, multiple regression was done on the factor scores as independent variables and the dividend pay-out ratio of 2016 as the dependent variable.
Large market capitalisation, and high PAT indicate high market values and profitability increasing the dividend pay-out ratio of the company.
Since all factors considered above have a positive sign while generating the factor score and the combined impact of all factors is considered to be positively related to dividend pay-out ratio, hence the expected sign of the factor is positive.
RRE and pay-out ratio are correlated to the factor and dividend pay-out ratio in the same way.
return on net worth and dividend pay-out ratio of previous year.
According to this observation, ROI and dividend pay-out ratio are positively correlated.
On running factor analysis, these variables were reduced into 7 factors which had a significant bearing in deciding the dividend policy of the firm when considering dividend pay-out ratio as the main determinant of dividend policy.
The apex bank added that banks that meet the minimum Capital Adequacy Ratio (CAR) but have a CRR of 'Above Average' or an NPL ratio of more than 5 percent but less than 10 percent would have a dividend pay-out ratio of not more than 30 percent.
Over the past five years the Trust has made a concerted effort to reduce its dividend pay-out ratio in order to retain more of its internally generated funds.