Target payout ratio

Target payout ratio

A firm's long-run dividend-to-earnings ratio. The firm's policy is to attempt to pay out a certain percentage of earnings, but it pays a stated dollar dividend and adjusts it to the target as base line increases in earnings occur.

Target Payout Ratio

The dividend that a publicly-traded company attempts to pay to shareholders each year as a percentage of its total earnings in a given year. There is no guarantee that the company will be able to pay the target payout ratio; if its earnings are particularly low in a year, it may pay a smaller percentage or even no dividend at all. It is important to note that even if the target payout ratio remains the same, the actual dividend may differ as earnings change each year and the payout ratio is a percentage rather than a dollar amount. See also: Omitted Dividend.
References in periodicals archive ?
5 billion A Zurich Economic Capital Model (Z-ECM) ratio of 100% - 120%, unchanged from the previous financial targets A new dividend policy with a target payout ratio of around 75% of net income after tax attributable to shareholders (NIAS).
A firm should have a target payout ratio and periodically adjust the payout toward the target 3.
State Street, which has taken advantage of volatility in Europe before, also expressed its commitment to returning capital to shareholders, with plans for a stock buyback with a target payout ratio in the range of 20-25%.
The company plans to distribute higher cash flows to shareholders with a medium-term target payout ratio of 20-40% of IFRS net income, with dividends being paid several times a year.
The target payout ratio of a firm depend on factors like growth and earning prospects of a particular company; the average cyclical movement of investment opportunities; working capital requirements; and internal fund flows judged by past experience; the relative importance attached by management to long-term capital gain as compared with current dividend income for its stock holders; its access to the capital markets on favorable terms, and company policies with respect to use of outside debt
The estimated coefficients on aggregate affiliate net income and aggregate lagged dividends reported in column 2 imply that parent firms with zero leverage have a target payout ratio of 50.
Emerging market firms often do have a target payout ratio like their developed country counterparts, but they are generally less concerned with volatility in dividends over time and, consequently, dividend smoothing over time is less important" (Glen et al.
t] = nominal earnings, and [Gamma] is the target payout ratio.
If the surplus persists, it may gradually increase its target payout ratio.
Amgen's management stated a target payout ratio of more than 60%, which does not deviate significantly from prior payouts made solely through share repurchases.
The introduction of a target payout ratio of approximately 75 percent of Underlying Profit replaces AGLs current progressive dividend policy.
Amgen's management stated a target payout ratio of 60%, which does not deviate significantly from prior payouts made solely through share repurchases.