Dividend Payout Ratio

The Dividend Payout Ratio measures the percentage of Stock Dividends per share to the Earnings Per Share, showing how the company is paying for its dividend payout.

The Dividend Payout Ratio measures the percentage of Stock dividends per number of Average Shares Outstanding to the Earnings per Share , showing how the company is paying for its dividend payout. The dividends paid should be coming from earnings the company generates.

A decreasing Dividend Payout ratio is generally a positive sign, showing the company is more able to cover its dividend payout with its Net Earnings. A company in financial trouble may have to use its own cash to meet its dividend obligations, which may be revealed with this ratio if the ratio is less than 1.0.

Tags: Financial Ratio