Dividend Payout Ratio Calculator
Calculate the dividend payout ratio from total dividends and net income, plus the retention ratio the company keeps.
How it works
Payout ratio = dividends paid ÷ net income × 100 · Retention ratio = 100 − payout ratio
The dividend payout ratio is the slice of a company’s profit handed to shareholders as dividends, with the rest — the retention or plowback ratio — reinvested in the business. A low payout leaves more capital to fund growth; a high one signals a mature company returning cash but with less runway to expand. A ratio above 100% means the dividend exceeds earnings, which usually cannot continue without dipping into cash reserves or debt.
Worked example
A company pays $3,000,000,000 in dividends from $10,000,000,000 of net income: the payout ratio is 3,000,000,000 ÷ 10,000,000,000 × 100 = 30%. It retains the other 70% of earnings to reinvest.
Frequently asked questions
What is a healthy payout ratio?
It varies by sector. Utilities and mature firms often pay 50%–80%, while growth companies may pay little or nothing. A ratio consistently near or above 100% is a warning the dividend may be unsustainable.
What is the retention ratio?
It is the mirror of the payout ratio — the share of earnings the company keeps and reinvests. A higher retention ratio, paired with strong returns on that capital, drives future earnings growth.
Can a payout ratio be over 100%?
Yes. It means the company is paying more in dividends than it earned that period, funding the gap from cash or borrowing. That can happen in a weak year, but it is not sustainable long term.
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Educational estimate, not investment advice. Ratios and valuation models are simplifications; verify figures against official filings and consult a licensed advisor before investing.