Dividend Payout Ratio Calculator

The Dividend Payout Ratio Calculator helps investors determine the percentage of a company’s earnings that is distributed to shareholders as dividends. This ratio is crucial for assessing a company’s financial health, growth strategy, and dividend sustainability. Investors use it to evaluate whether a company is reinvesting enough profits for future growth or returning substantial earnings to shareholders.

Formula of Dividend Payout Ratio Calculator

The Dividend Payout Ratio can be calculated in multiple ways, depending on the financial focus:

1. For Common Stock Specifically:

Dividend Payout Ratio = Common Stock Dividends / (Net Income - Preferred Dividends)

2. For Cash Flow Consideration:

Dividend Payout Ratio = Total Dividends Paid / Operating Cash Flow

3. For Retained Earnings Perspective:

Dividend Payout Ratio = 1 - Retention Ratio

Where:

Total Dividends Paid = All dividend distributions to shareholders during the period
Net Income = Company's total earnings after taxes and all expenses
DPS (Dividends Per Share) = Total Dividends Paid / Outstanding Shares
EPS (Earnings Per Share) = (Net Income - Preferred Dividends) / Weighted Average Outstanding Shares
Common Stock Dividends = Dividends paid only to common shareholders
Preferred Dividends = Dividends paid to preferred shareholders
Operating Cash Flow = Cash generated from normal business operations
Retention Ratio = Proportion of earnings retained in the business (not paid as dividends)

Quick Reference Table

The following table provides general dividend payout ratio benchmarks that investors commonly refer to:

Example of Dividend Payout Ratio Calculator

Let’s assume a company reports the following financials:

• Net Income = $500,000
• Preferred Dividends = $50,000
• Common Stock Dividends = $200,000
• Operating Cash Flow = $600,000
• Total Dividends Paid = $250,000

Using the formulas:

1. Common Stock Dividend Payout Ratio:

= 200,000 / (500,000 - 50,000)
= 200,000 / 450,000
= 44.4%

2. Cash Flow Dividend Payout Ratio:

= 250,000 / 600,000
= 41.7%

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