IN PLAIN ENGLISH
How much of its earnings a company hands out as dividends.
WHERE YOU MEET IT
Payout Ratio in a holding's Dividend Analysis. It's also the main input to the dividend safety score.
WATCH OUT FOR
Above roughly 80% leaves little room for a bad year — or for raises.
FULL DEFINITION
The proportion of earnings paid out as dividends to shareholders, typically expressed as a percentage of the company's earnings.
EXAMPLE
A company earns £100m and pays out £40m in dividends. Payout Ratio = 40%. They keep £60m to build new factories.
HOW IT'S CALCULATED
Payout Ratio = dividends per share ÷ earnings per share, expressed as a percentage. Supplied as a trailing twelve month figure by the market data provider rather than derived from your holdings, so it reflects the company's accounts, not your position. Shows 0% for a company that paid no dividend over the period, and N/A when the provider has no figure, which is the case for funds and ETFs.
EXPLAINED IN
Educational content only. It is not personal financial advice.