Dividend Payout ratio, or simply payout ratio,
is the percentage of a company's earnings paid as dividends to the shareholders.
It indicates how well the company's earnings support the dividend
payment.
Dividend Payout ratio = Dividend per equity share X 100
Earnings per share (EPS)
E.g.: For FY10, a company had EPS of Rs. 10. It paid dividend of 20% (Rs. 2 per equity share of Rs. 10 each) for the year.
Dividend payout ratio = Rs. 2 X 100
Rs. 10
Dividend payout ratio = 20%
Dividend Payout ratio = Dividend per equity share X 100
Earnings per share (EPS)
E.g.: For FY10, a company had EPS of Rs. 10. It paid dividend of 20% (Rs. 2 per equity share of Rs. 10 each) for the year.
Dividend payout ratio = Rs. 2 X 100
Rs. 10
Dividend payout ratio = 20%
