Payout ratio

(redirected from Pay-Out Ratio)

Payout ratio

Generally, the proportion of earnings paid out to the common stockholders as dividends. Morespecifically, the firm's cash dividend divided by the firm's earnings in the same reporting period.

Payout Ratio

In fundamental analysis, the opposite of the plowback ratio. That is, the 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 plowback ratio in a slow-growing company and a lower one in a fast-growing company.

payout ratio

The ratio from which the percentage of net income a firm pays to its stockholders in dividends is calculated. Companies paying most of their earnings in dividends have little left for investment to provide for future earnings growth. Stock of firms with high payout ratios appeals primarily to investors seeking high current income and limited capital growth. Also called dividend payout ratio. See also dividend coverage, retained earnings.

Payout ratio.

A payout ratio, expressed as a percentage, is the rate at which a company distributes earnings to its shareholders in the form of dividends.

For example, a company that earns $5 a share and pays out $2 a share has a payout ratio of 2 to 5, or 40%.

A normal range for companies that do pay dividends is 25% to 50% of earnings. But the percentage may vary if a company keeps the amount of its dividend consistent with past dividends regardless of a drop in its earnings.

References in periodicals archive ?
Overtime we expect to build to a regular dividend pay-out ratio in the order of 40%.
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. Leverage and dividend policy have an inverse relationship while profitability and liquidity have a positive relation with the dividend policy; also growth-firms tend to distribute higher dividends.
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, EPS and pay-out ratio 2015 in the fourth factor returns to shareholders have negative, negative and positive correlations respectively.
return on net worth and dividend pay-out ratio of previous year.
60 per cent pay-out ratio. Were Al Rajhi to maintain a 60 per cent pay-out, wBofA Merrill Lynch estimates tier-1 ratios would reach 17.4 per cent by 2021 from 21 per cent currently, comfortably above regulatory requirements.
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.
Chief executive Antonio Horta-Osorio disclosed the high dividend target during a recent round of investor road shows, which would give it the highest pay-out ratio of its peers, according to newspaper reports.
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.