Dividend Payout Ratio Calculator

Calculate the dividend payout ratio

The dividend payout ratio shows what portion of a company's earnings is paid out to shareholders as dividends rather than kept in the business. It is calculated by dividing total dividends by net income, or equivalently by dividing the dividend per share by earnings per share. A payout ratio of thirty percent means the company distributes thirty cents of every dollar of profit and retains the rest. The complement is the retention ratio, the share of earnings kept to reinvest in growth.

Together these two ratios describe how a company balances rewarding shareholders now against funding future growth.

What the payout ratio signals

Investors watch the payout ratio to judge whether a dividend is sustainable and what a company's priorities are. A low payout ratio suggests room to grow the dividend and plenty retained for expansion, which is common in younger, fast-growing companies. A high ratio returns more cash to shareholders but leaves less for reinvestment and can be risky if earnings fall, since a ratio above one hundred percent means the company is paying out more than it earns.

Mature, stable companies often sustain higher payout ratios, while growth companies may pay little or nothing. Compare within an industry for context. All calculation happens locally in your browser.

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