Dividend Payout Ratio Calculator

This calculator helps you determine the proportion of net income paid out as dividends to shareholders.

Input Parameters

Calculation Results

Calculation Formula

Dividend Payout Ratio = (Dividend Per Share / Net Income) × 100%

Where:
Dividend Per Share (DPS): The total dividends paid per share of common stock
Net Income: The company's total earnings after all expenses and taxes

Dividend Payout Ratio Calculator Usage Guide

Learn how to use the Dividend Payout Ratio Calculator and understand its significance in financial analysis.

What is the Dividend Payout Ratio?

The Dividend Payout Ratio is a financial metric that shows the proportion of a company's earnings paid out to shareholders in the form of dividends. It indicates how much of the company's profit is distributed to shareholders versus how much is retained for reinvestment.

How to Use the Calculator

  1. Enter the Dividend Per Share (DPS) in the first input field. This is the total dividends paid per share of common stock.
  2. Enter the Net Income in the second input field. This is the company's total earnings after all expenses and taxes.
  3. Click the Calculate button to compute the Dividend Payout Ratio.
  4. The result will be displayed as a percentage in the Dividend Payout Ratio (%) field.

Interpreting the Results

A higher Dividend Payout Ratio indicates that a larger portion of earnings is being paid out to shareholders, which may be attractive to income-focused investors. A lower ratio suggests that the company is retaining more earnings to reinvest in growth opportunities.

Example

For example, if a company pays $2 in dividends per share and has a net income of $10 million, the Dividend Payout Ratio would be calculated as follows:

Dividend Payout Ratio = ($2 / $10,000,000) × 100% = 0.00002 × 100% = 0.002%

Important Notes

  • The Dividend Payout Ratio should be analyzed in conjunction with other financial metrics for a comprehensive understanding of a company's financial health.