Dividend payout ratio

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Dividend payout ratio

Percentage of earnings paid out as dividends.
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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.
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dividend payout ratio

Wall Street Words: An A to Z Guide to Investment Terms for Today's Investor by David L. Scott. Copyright © 2003 by Houghton Mifflin Company. Published by Houghton Mifflin Company. All rights reserved. All rights reserved.

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.

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References in periodicals archive ?
The board's stated long-term targeted dividend payout ratio continues to be in the range of 60 to 70 percent of earnings from operations.
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The dividend payout ratio has been the subject of debate since long ago.
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SHAREHOLDERS of Fidson Healthcare Plc have unanimously approved the dividend payout of N300 million for the year ended 31 December 2017, representing 20 kobo per ordinary share of 50 kobo.
Entercom has a dividend payout ratio of 38.3%, which means that the company spends approximately $0.38 for dividend distribution out of every $1 earned, Accesswirereports.
Their dividend payout ratio has been far larger than the figure of domestic banks, and industry observers denounced their practices for focusing only on "draining the nation's wealth" without fulfilling corporate social responsibility programs
Italy-based investment bank, Mediobanca, has said that it has raised its dividend payout, according to Reuters.