Dividend Payout Ratio Calculator
Calculate a company's dividend payout ratio and retention ratio from dividends per share and earnings per share.
$
$
Results
Dividend Payout Ratio
30.0%
Retention Ratio
70.0%
How to Use the Dividend Payout Ratio Calculator
Enter dividends paid per share and earnings per share (EPS) to see what percentage of a company's earnings is being returned to shareholders as dividends. The remainder — the retention ratio — is the share of earnings the company keeps to reinvest in the business, pay down debt, or build cash reserves.
Payout Ratio = (Dividends Per Share / EPS) × 100
Retention Ratio = 100 − Payout Ratio
Retention Ratio = 100 − Payout Ratio
Example
A company pays $1.20 per share in dividends and reports $4.00 in earnings per share. Payout Ratio = (1.20 / 4.00) × 100 = 30%, meaning it pays out 30% of earnings as dividends and retains the other 70%.
Common Use Cases
- Assessing how sustainable a company's dividend is relative to its actual earnings.
- Comparing capital allocation strategy between growth-focused and income-focused companies.
- Screening dividend stocks for payout ratios that leave room for future dividend growth.
FAQs
- What counts as a healthy payout ratio? It varies by industry and company maturity — mature, stable companies often pay out 40-60% of earnings, while high-growth companies typically retain most or all earnings and pay a low or zero dividend. A payout ratio consistently above 100% (paying out more than is earned) is a warning sign that a dividend cut may be coming.
- How is this different from dividend yield? Dividend yield divides the annual dividend by the current share price, measuring the cash return relative to what you'd pay for the stock today. Payout ratio instead divides the dividend by earnings per share, measuring what fraction of profit is being distributed — the two use completely different denominators and answer different questions.
- Can I use total dividends and net income instead of per-share figures? Yes — the ratio comes out the same whether you use total dividends paid divided by net income, or dividends per share divided by earnings per share, as long as you're consistent and use the same share count basis for both figures.