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Dividend Payout Ratio Calculator

Find a stock’s dividend payout ratio.

Result

40.00%
60.00%

How it is calculated

The payout ratio is dividends / net income × 100, and the retention ratio is 100% - payout ratio. Both inputs must be in the same currency and cover the same period, for example total dividends paid in a year and net income for that year. You can also use dividend per share and earnings per share, as long as both are per share. Net income has to be greater than zero; with zero or negative earnings the tool gives no result because the ratio has no meaning. A payout above 100% is allowed and produces a negative retention ratio, which means the company paid out more than it earned.

Worked example

A company earns net income of 1,000,000 and pays dividends of 400,000. Payout ratio = 400,000 / 1,000,000 = 0.40, shown as 40.00%. Retention ratio = 100% - 40% = 60.00%. So the company distributed 40% of its profit and reinvested the remaining 60%.

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Common mistakes

  • Mixing per-share and total figures, such as total dividends divided by EPS. Both must be totals or both per share.
  • Using revenue or operating profit in place of net income, which understates the ratio.
  • Comparing periods that do not match, like a full-year dividend against one quarter of earnings.
  • Reading a very high ratio as automatically generous. Above 100% it is paid from reserves or debt, not from that period's profit.

Sources

About this calculator

This calculator divides dividends paid by net income (or earnings per share) to find the dividend payout ratio, and subtracts that from 100% to get the retention ratio — the share of profit the company keeps and reinvests rather than paying out.

Dividend investors use it to judge whether a company's dividend is sustainable: a very high payout ratio (near or above 100%) can signal the dividend is at risk of being cut if earnings dip, while a moderate ratio suggests room for future dividend growth.

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Comments (1)

  • Editorial team

    A payout ratio above 100% means the company paid out more than it earned that period, so the difference came from savings, borrowing or one-off items. One year does not prove a problem, but a repeated pattern deserves a look at cash flow. Use dividends and net income for the same period and on the same basis, either totals or per share. The retention figure shows what stayed in the business. Which sector's payout ratios do you follow?

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