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Dividend payout ratio definition

Description

Dividend payout ratio shows the percentage of net income, used for dividend payments. Or, in the other words - the amount of net income, used for dividend payments per one share dollar. Data to calculate this ratio is collected from the income statement and stock market bulletin.

This ratio is important for the company’s shareholders, because it shows the percentage of net income they are getting paid.

Norms and limitations

In general there are no norms for this ratio.

Formula

Dividend per share is the amount of money for one outstanding share.

Earnings per share are calculated by dividing net income from shares outstanding.