What Is a Dividend Payout Ratio? (Beginner Guide)
Learn what dividend payout ratio is, how to calculate it, and how to evaluate if a dividend is safe.
Dividend Payout Ratio Calculator
Calculate a company's dividend payout ratio from per-share figures or company totals, with dividend cover, retained earnings and a plain-English reading of the result.
1. Enter the numbers
Use a full year of figures. Earnings should be net income from the income statement, not a single quarter.
2. Result
Dividend payout ratio–
- Retained for the business
- – Share of earnings kept
- Dividend cover
- – Earnings ÷ dividends
- Cash flow payout
- – Dividend ÷ free cash flow
How to read it
| Payout ratio | What it often means |
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Ranges are general. REITs and utilities usually pay out more than technology companies, so compare within the same industry.
How this calculator works
The payout ratio is dividends divided by earnings: dividend per share ÷ earnings per share, or total dividends ÷ net income. It shows how much of its profit a company pays to shareholders. A lower ratio leaves more room to keep the dividend if profits fall, while a ratio above 100% means the company paid out more than it earned. Free cash flow is a useful cross-check, because earnings include non-cash items. Read the payout ratio guide for more.
This is an educational calculation, not investment advice.
Investment Disclaimer
All information and tools on this website are provided for informational purposes only. The calculations, examples, and projections are simplified estimates and may not reflect real-world investment results.
Nothing on this website should be interpreted as financial, investment, tax, or legal advice. You are solely responsible for your investment decisions and any outcomes resulting from them.
Past performance and projected returns do not guarantee future results. Always conduct your own research and consult a qualified financial advisor before making investment decisions.