Payout 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.
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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.
Farlex Financial Dictionary. © 2012 Farlex, Inc. All Rights Reserved

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.
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.

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.

Dictionary of Financial Terms. Copyright © 2008 Lightbulb Press, Inc. All Rights Reserved.
References in periodicals archive ?
In fact, in the case of the 10 percent payout ratio, where the capital investment of $100 has a pre-tax value of $100, the effective corporate income tax rate is 87 percent, leaving an after-tax net present value of only $13.04.
The superiority of repurchases as a payout mechanism is confirmed by Grullon and Michaely [41] who report that the overall payout ratio from 1974 to 1998 has remained constant at around 27%.
Commenting on the redemption, Michael Maturo, Reckson's Chief Financial Officer, stated, "The redemption of our remaining outstanding preferred stock with newly issued common equity, will further strengthen our balance sheet, create additional financial flexibility and improve our dividend payout ratio.
A company should choose a payout ratio that directs the majority of its free cash flow to shareholders as a dividend.
Payout of PkR27.5/sh rests higher than our estimate of PkR22.5/sh taking full year payout to PkR115/sh implying a payout ratio of 66% vs.
* Free cash flow post-dividend for 2019 is estimated by Kwan to be $124 million, which implies an all-in payout ratio of 81%.
This resulted in a payout ratio of 110.0% for the three months and $116.9% for the six months ended June 30, 2019.
"With a stated policy of a 70% payout ratio, it achieved 90% payout last year, and is on course to provide a continuing strong earnings and dvidend stream this year," he said.
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.
Full year dividend will increment by 10.0% to HKD 0.66 per share, representing a dividend payout ratio of 55.3%, compared to 55.1% in 2017.