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Spireframe Software, makers of Value Investor - the easiest way to learn stock analysis and valuation of stocks. Spireframe Software, makers of Value Investor - the easiest way to learn stock analysis and valuation of stocks.  
Dividend Payout
Stock Dividends / Average Shares Outstanding
 Dividend Payout =
 Net Earnings / Average Shares Outstanding

Explanation of Dividend Payout:

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 dividends paid should be coming from the earnings the company generates. 

Importance of Dividend Payout:

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.

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