Dividend Payout Formula

Dividend Payout Formula

Dividend payout ratio can be calculated by dividing the dividend with earning. Dividend payout ratio is simply explains that what percentage of profit is being distributed among the equity holder.

Dividend Payout Ratio =            Dividend during the year    

                                                     EPS or Earning

Example

Company A Dividend = 30 cent

Earning of Company A= 50 Cent

Company B Dividend = 40 Cent

Earning of Company B= 50 Cent

Calculate Payout ratio for both companies?

Solution

Dividend Payout Ratio =            Dividend during the year    

                                                     EPS or Earning

Company A = .3    

                     .5

=60%

Company B = .4    

                     .5

=80%