Quick Definition

The dividend payout ratio is a financial metric that measures the percentage of a company's earnings paid out to shareholders as dividends.

Formula

Examples

• 1A company earning $1 million in a year and paying $300,000 as dividends has a dividend payout ratio of 30%.
• 2If a company's earnings are $500,000 and it pays $250,000 in dividends, the dividend payout ratio is 50%.
• 3A firm with earnings of $2 million that pays out $1 million in dividends has a dividend payout ratio of 50%.

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