Dividends
Payout Ratio
Dividend Payout Ratio
Definition
Dividends ÷ Net Income × 100 = Percentage of earnings paid as dividends
Explanation
The payout ratio shows what percentage of earnings goes to dividends. A 30% payout ratio means 30 cents of every dollar earned goes to shareholders. Too high (>80%) might be unsustainable; too low might mean poor shareholder returns.
Example
Net income $1B, dividends $300M → Payout ratio 30%