The share of earnings a company pays out as dividends, with P/E and yields when you add a share price.
Adds the P/E ratio, earnings yield and dividend yield.
Example Result
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Estimates for planning only; not financial, tax or investment advice. See our Disclaimer.
A dividend is paid out of profit, so the first test of whether it can continue is how much of the profit it takes. The payout ratio answers that: annual dividends per share divided by earnings per share. A company earning $5.20 a share and paying $2.40 pays out 46% and keeps 54% to reinvest, repay debt or absorb a bad year. Enter the annual dividend per share and earnings per share; add the share price to get the P/E ratio, the earnings yield and the dividend yield as well. The guide below compares typical payout ratios across sectors, shows how payout links dividend yield to the P/E ratio, and explains why the ratio misleads for REITs, for companies with one-off profits or losses, and for companies that return cash mostly through buybacks.
Enter the annual dividend per share (the regular dividend, without one-off specials).
Enter earnings per share for the same twelve months.
Optionally add the share price for P/E, earnings yield and dividend yield, then press Calculate.
By O.E. — Partner, chairman of the board and CEO of a metal products manufacturer for 21 years; the company exports to 45 countries.
Drafted with AI assistance; calculations checked against primary sources and tested with the site's own code. About FlowUtil
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Per share: annual dividend per share ÷ EPS — $2.40 ÷ $5.20 = 46.15%. In totals: total dividends ÷ net income — $1.2bn ÷ $2.6bn = 46.15%. The retention ratio is 1 − payout = 53.85%. Use the same period for both numbers, usually the last twelve months, and the dividend actually declared; special one-off dividends distort the ratio.
With a share price the calculator adds the P/E ratio (price ÷ EPS), the earnings yield (EPS ÷ price) and the dividend yield (DPS ÷ price). The three are linked: dividend yield = payout ratio × earnings yield = payout ratio ÷ P/E.
| Symbol | Meaning |
|---|---|
| Payout | DPS ÷ EPS × 100 |
| P/E | Share price ÷ EPS (positive EPS only) |
| Dividend yield | DPS ÷ share price = Payout ÷ P/E |
1$2.40 dividend, $5.20 EPS, $60 share price.
2.40 ÷ 5.20; 60 ÷ 5.20; 2.40 ÷ 60
Payout 46.15% · P/E 11.54 · earnings yield 8.67% · dividend yield 4.00%
The dividend is covered more than twice by earnings; 46.15% × 8.67% = 4.00%.
2$1.20 dividend, $3.00 EPS.
1.20 ÷ 3.00
Payout 40.00%
Close to the US average.
3$3.60 dividend, $3.00 EPS.
3.60 ÷ 3.00
Payout 120.00% · retention −20.00%
The excess comes from cash reserves, borrowing or asset sales. One year can be a deliberate choice; several years in a row usually ends with a cut.
4$1.00 dividend, EPS −$2.00.
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Payout ratio not meaningful
There are no earnings to pay out: the whole dividend comes from something other than this year's profit.
| Sector | Dividends ÷ net income |
|---|---|
| Software | 21.0% |
| All US companies | 34.8% |
| Telecom services | 47.7% |
| Utilities (general) | 65.4% |
| Household products | 67.3% |
| Tobacco | 87.6% |
| Food processing | 143.1% |
Aggregates from Aswath Damodaran's dataset. Regulated utilities with stable cash flow sustain payout ratios that would be risky for a cyclical manufacturer; a sector total above 100% shows how one bad year of earnings inflates the ratio.
REITs: US real estate investment trusts must distribute at least 90% of their REIT taxable income to keep their tax status (Internal Revenue Code §857). Large depreciation charges depress their accounting net income, so payout ratios on net income often exceed 100%; analysts use funds from operations (FFO) instead.
One-off items make the ratio jump or look safe — use normalised earnings. Dividends are paid in cash, so dividends ÷ free cash flow is a stricter test for capital-intensive companies. And buybacks: across all US companies in January 2026, dividends were 34.8% of net income, dividends plus buybacks 83.2%.