Dividend Payout Ratio Calculator

What is the Dividend Payout Ratio?

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

How to Use This Calculator

1. Enter the company's Dividends Per Share (DPS) in the first input field. This is the total dividends paid per share of stock.
2. Enter the company's Earnings Per Share (EPS) in the second input field. This represents the portion of a company's profit allocated to each outstanding share of common stock.
3. Click the "Calculate" button to compute the dividend payout ratio and its percentage.
4. The results will be displayed as a decimal and percentage.

Interpreting the Results

A dividend payout ratio between 0 and 1 indicates that the company is paying out a portion of its earnings as dividends, while retaining the rest for reinvestment. A ratio greater than 1 would theoretically mean the company is paying out more in dividends than it's earning, which is generally unsustainable long-term.

Example

If a company pays $0.50 per share in dividends (DPS) and has earnings of $2.50 per share (EPS), the dividend payout ratio would be:

$0.50 / $2.50 = 0.20 or 20%

This means the company pays out 20% of its earnings as dividends to shareholders.

Important Considerations

• A high payout ratio may indicate a mature company with limited growth opportunities.
• A low payout ratio may indicate a company focusing on growth and reinvestment.
• The ideal payout ratio varies by industry and company stage.
• Always consider other financial metrics and company context when evaluating dividend policies.