Payout ratios show how sustainable a dividend is. Mature companies often pay out 40–60%; payout ratios above 100% mean the company is paying more than it earns, which can’t last.
How to use the Dividend Payout Ratio Calculator
- Use
- Total dividends
- Net income
- Dividends per share
- Diluted earnings per share
Results update as you type, and every field accepts the units shown in its menu.
How it works
Enter total dividends and net income, or dividends per share and diluted EPS.
Tips
- Take figures from the same financial statements and the same fiscal year.
- Compare ratios with companies in the same industry, not across industries.
- Use several valuation measures together; no single ratio tells the whole story.
- Market prices change every second – refresh the share price before you rely on a result.
Common mistakes to avoid
- Mixing per-share figures with company totals.
- Using trailing earnings for one company and forward earnings for another.
- Forgetting dilution from options and convertible securities.
Inputs explained
| Field | What to enter |
|---|---|
| Use | Choose one: Company totals, Per-share figures |
| Total dividends | Amount in your currency |
| Net income | Amount in your currency |
| Dividends per share | Amount in your currency |
| Diluted earnings per share | Amount in your currency |
Example values
How the main result changes when Total dividends changes and everything else stays at the example values above:
| Total dividends | Dividend payout ratio (%) |
|---|---|
| 20,000,000 | 20 |
| 30,000,000 | 30 |
| 40,000,000 | 40 |
| 50,000,000 | 50 |
| 60,000,000 | 60 |
| 80,000,000 | 80 |
Formula
Payout ratio = total dividends ÷ net income = dividends per share ÷ diluted EPSRetention ratio = 1 − payout ratioWorked example
Inputs — Use: Company totals; Total dividends: $40,000,000; Net income: $100,000,000; Dividends per share: $1.6; Diluted earnings per share: $4.
Results — Dividend payout ratio = 40 %; Retention ratio = 60 %; Sustainability = Moderate.
Frequently asked questions
What is a good payout ratio?
30–60% is often seen as sustainable; it depends on the industry.
Why would a payout ratio exceed 100%?
Dividends are funded from reserves or debt – a warning sign.
Do REITs have high payout ratios?
Yes – U.S. REITs must distribute at least 90% of taxable income.
What formula does the Dividend Payout Ratio Calculator use?
Payout ratio = total dividends ÷ net income = dividends per share ÷ diluted EPS.