Enter the total amount of dividends and the total amount of net income of a security. The calculator will evaluate and display the dividend payout ratio.
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Dividend Payout Ratio Formula
The following formula can be used to calculate the dividend ratio of a stock or security.
DR = D / NI
- Where DR is the dividend payout ratio
- D is the total amount of dividends
- NI is the net income
Dividend Payout Ratio Definition
A dividend payout ratio is a ratio of total dividends to the net income of a security or business. It’s used to analyze how the total amount of dividends vary with changes in net income since net income is often a leading factor for dividend payouts for the following year.
Dividend Payout Ratio Example
How to calculate the dividend payout ratio?
- First, determine the total dividends.
Calculate the total value of the dividends earned.
- Next determine the net income.
Calculate the net income generated by the underlying business.
- Finally, calculate the dividend payout ratio.
Calculate the ratio using the formula above.
A dividend payout ratio is a measure of the ratio of the dividend payout of a security to the total net income of the underlying company.