The percentage of earnings paid to shareholders in dividends.

Calculated as:

explains 'Dividend Payout Ratio'

The payout ratio provides an idea of how well earnings support the dividend payments. More mature companies tend to have a higher payout ratio.

In the U.K. there is a similar ratio, which is known as dividend cover. It is calculated as earnings per share divided by dividends per share.

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By Muhammad Atif Saeed on 21:02. Filed under D , Definitions . Follow any responses to the RSS 2.0. Leave a response