Dividend Payout Ratio Calculator
Calculate what percentage of earnings a company pays out as dividends to shareholders
Calculate Dividend Payout Ratio
Total Company Figures
Found in cash flow statement (financing activities)
Found in income statement (bottom line)
Dividend Payout Ratio Results
Payout Ratio Analysis
Pfizer Example (2019)
Company Financials
Total Dividends: $8,043 million
Net Income: $16,273 million
Industry: Pharmaceutical
Ticker: NYSE: PFE
Calculation
DPR = $8,043M ÷ $16,273M
DPR = 0.4943
DPR = 49.43%
Healthy payout ratio under 60%
Payout Ratio Guidelines
Conservative
Low dividends, high retention
Growth-focused companies
Balanced
Optimal balance
Mature, stable companies
High Risk
Limited growth capacity
Monitor sustainability
Dividend Investment Tips
Look for payout ratios under 60% for sustainability
Check dividend growth history (5+ years)
Consider free cash flow coverage
Analyze ROE trends (target >12%)
Avoid companies with declining earnings
Understanding Dividend Payout Ratio
What is Dividend Payout Ratio?
The dividend payout ratio shows what percentage of a company's net income is distributed to shareholders as dividends. It's a key indicator of a company's dividend policy and financial health. A balanced ratio suggests sustainable dividend payments while preserving capital for growth.
Why It Matters
- •Indicates dividend sustainability
- •Shows management's capital allocation strategy
- •Helps assess investment risk and growth potential
- •Guides dividend investor decisions
Calculation Methods
DPR = Total Dividends ÷ Net Income
Company-wide calculation
DPR = DPS ÷ EPS
Per-share calculation
Both methods: Should yield the same result for a given company
Industry Considerations
- ✓Utilities: Higher ratios (60-80%) are normal
- ✓Technology: Lower ratios due to growth focus
- ✓REITs: Required to pay 90% of income
- ✓Mature companies: 40-60% is typical
Red Flags
- ✗Payout ratio consistently above 100%
- ✗Rapidly increasing payout ratio
- ✗Declining earnings with maintained dividends
- ✗Borrowing money to pay dividends