Bob Davies •
August 30, 2023
Dividend payout ratio calculator
The dividend payout ratio is a crucial financial metric that measures the proportion of earnings a company pays out to its shareholders in the form of dividends. While there are various ways to calculate this ratio, we'll focus on a specific method that employs Earnings per Share (EPS) and Dividends per Share (DPS) for simplicity.
In this article, we present a handy tool, the Dividend Payout Ratio Calculator that will give you essential insights to gauge dividend sustainability, and aid you in making well-informed investment decisions and lower investment risk.
Understanding dividend payout ratio
The dividend payout ratio signifies the proportion of earnings a company shares with its shareholders as dividends. It helps investors gauge how much of a company's profits are being returned to them rather than reinvested back into the business.
Calculation methods
Different methods can be employed to calculate the dividend payout ratio, such as using total dividends and net income or dividends and earnings. In this article, we'll utilise the formula involving Earnings per Share (EPS) and Dividends per Share (DPS)
Formula
Dividend Payout Ratio = (DPS / EPS) * 100
Using the dividend payout ratio calculator
To facilitate easy calculation of the dividend payout ratio, we've provided a user-friendly calculator below. Simply input the Dividends per Share (DPS) and Earnings per Share (EPS), and the calculator will compute the ratio for you.
Utilising these dividend calculators empowers you to make well-informed investment choices. The Dividend Payout Ratio Calculator provides insights into how much of a company's earnings are distributed as dividends. Please check other investing calculators that will help you to make investment decisions with greater confidence.
- Dividend calculator (this will allow you to estimate potential dividends from your investments)
- Dividend cover calculator (this tool is very similar to the Dividend Payout Ratio Calculator, it is designed to help investors assess the company's capacity to cover its dividend payments. Check also our article about dividend cover)
- Dividend reinvestment calculator (this financial tool helps investors estimate the future value of their investments when they choose to reinvest their dividends)