Dividend Payout Ratio Calculator
Calculate dividend payout ratio and retention ratio from dividends per share and EPS, or from total dividends paid and net income.
What Is the Dividend Payout Ratio?
The dividend payout ratio tells you what percentage of a company’s earnings are paid out to shareholders as dividends. The rest is retained and reinvested back into the business.
Formulas
Per-Share Method: Payout Ratio = Dividends Per Share ÷ Earnings Per Share (EPS) × 100%
Company-Wide Method: Payout Ratio = Total Dividends Paid ÷ Net Income × 100%
Retention Ratio = 100% − Payout Ratio
Benchmark Ranges
| Payout Ratio | Company Profile |
|---|---|
| Under 25% | Aggressive growth, reinvesting most earnings |
| 25% – 50% | Balanced, rewarding shareholders while retaining capital |
| 50% – 75% | Income-focused, mature company with stable earnings |
| Over 75% | Caution, may be unsustainable if earnings decline |
| Over 100% | Paying dividends from debt or reserves, a red flag |
Industry Context
Payout ratios vary significantly by sector. Utilities and REITs (real-estate investment trusts) often pay 70–90% because they have predictable, regulated revenues. Tech companies often pay 0–25% or nothing at all, preferring buybacks or reinvestment. Consumer staples (Coca-Cola, Procter & Gamble) typically pay 50–70%.
Retention Ratio
The retention ratio is the complement of the payout ratio. A company with a 40% payout ratio retains 60% of earnings. The retained portion funds research and development, debt repayment, acquisitions, and organic growth.
High retention ratios are associated with higher long-term earnings growth, but only if management deploys the capital effectively.
Worked example
A company earns $6.00 per share and pays $2.50 of it out as dividends.
Payout ratio = $2.50 ÷ $6.00 = 41.67% Retention ratio = 100% − 41.67% = 58.33% Dividend cover = $6.00 ÷ $2.50 = 2.40 times
Dividend cover is the same fact turned upside down, and it is the figure UK and Australian reporting tends to quote. Earnings could fall by more than half before this dividend was at risk from earnings alone. Below 1.5 times cover, a bad year starts to threaten the payment.
A loss year breaks the ratio, it does not just make it large
If earnings are negative the division returns a negative percentage, and a negative payout ratio is meaningless rather than alarming. A company losing money while still paying a dividend is funding it from cash, borrowings, or reserves, and the number to look at is how many years of cash the payment consumes, not a ratio of it to a loss.
How we build and check this calculator
This calculator runs entirely in your browser, so the numbers you enter stay on your device. The math behind it is written by hand and tested against worked examples and standard references before the page goes live.
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