What is dividend payout ratio?

By Research Desk
about 5 years ago

Dividend Payout ratio, or simply payout ratio, is the percentage of a company’s earnings paid as dividends to the shareholders. It indicates how well the company’s earnings support the dividend payment.


Dividend Payout ratio = Dividend per equity share X 100

                                    Earnings per share (EPS)

 

E.g.: For FY13, a company had EPS of Rs. 10. It paid dividend of 20% (Rs. 2 per equity share of Rs. 10 each) for the year.

 

Dividend payout ratio = Rs. 2 X 100

                                    Rs. 10

 

Dividend payout ratio = 20%

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