Dividend Payout Ratio Calculator
Find out what percentage of a company's earnings goes to dividend payments. Enter total dividends and net income, or use per-share figures. The calculator also shows the retention ratio and a sustainability assessment.
The dividend payout ratio tells you how much of a company's earnings are returned to shareholders as dividends. A company earning $5 million in net income that pays $2 million in dividends has a 40% payout ratio, meaning it retains 60% of earnings for reinvestment and growth.
You can calculate it two ways:
- Total method: Total Dividends Paid / Net Income x 100
- Per-share method: Dividends Per Share (DPS) / Earnings Per Share (EPS) x 100
Both methods give the same result. The per-share method is convenient when you only have per-share data from financial websites.
What the Payout Ratio Tells You
A low payout ratio (under 35%) suggests the company has plenty of room to increase dividends or is reinvesting heavily in growth. This is typical for younger, faster-growing companies.
A moderate ratio (35-55%) indicates a healthy balance between rewarding shareholders and funding growth. Many established blue-chip companies fall in this range.
A high ratio (above 75%) means most earnings go to dividends, leaving little for reinvestment. REITs and utilities often have high payout ratios by design -- REITs are required to distribute at least 90% of taxable income. But for other companies, a consistently high ratio could signal that a dividend cut is coming if earnings decline.