Dividend Payout Ratio Calculator: What Share Is Paid Out

Is a 40.00% dividend payout ratio high or low?

On the defaults — $2.00 of dividends per share and $5.00 of earnings per share — the dividend payout ratio is 40.00%. A 40.00% ratio is neither high nor low on its own: it means 40 cents of every dollar of earnings is paid out and 60 cents is kept — the kept part funds growth, pays down debt, or builds a buffer. A ratio of 30–50% is typical for a mature, steady company: enough to reward shareholders, enough kept to keep growing. A ratio of 0% means the company pays no dividend at all — young growth companies commonly pay nothing and reinvest everything. A ratio above 100% means the company paid out more than it earned — possible for a year or two from cash reserves or borrowing, but it cannot last, and a rising ratio on falling earnings is the classic dividend-cut warning.

Three things about the model are worth stating plainly.

First, the dividend payout ratio is $2.00 ÷ $5.00 × 100 = 40.00%. Second, the retained per share is $5.00 − $2.00 = $3.00 (60.00% retained). And third, the dividends per share needed for a 50.00% payout is 50.00% × $5.00 = $2.50, and the earnings per share allowed for a 50.00% payout is $2.00 ÷ 50.00% = $4.00; all listed in Accuracy & limitations.

The worked example, line by line

Setup: $2.00 dividends per share, $5.00 earnings per share, target ratio 50.00%.

Line 1 — the dividend payout ratio. The ratio is $2.00 ÷ $5.00 × 100 = 40.00%.

Line 2 — the retained per share. The retained per share is $5.00 − $2.00 = $3.00 (60.00% retained).

Line 3 — the dividends per share needed. The dividends per share needed for a 50.00% payout is 50.00% × $5.00 = $2.50.

Line 4 — the earnings per share allowed. The earnings per share allowed for a 50.00% payout is $2.00 ÷ 50.00% = $4.00.

Line 5 — the check. $2.50 ÷ $5.00 × 100 = 50.00%, the target ratio; and $2.00 ÷ $4.00 × 100 = 50.00%, the target ratio.

Every branch, checked

Dividends per share $1.00: Dividends per share $1.00; earnings per share $5.00; dividend payout ratio 20.00%; retained per share $4.00 (80.00% retained); dividends per share needed for the 50.00% target $2.50; earnings per share allowed for the 50.00% target $2.00 — With dividends per share of $1.00 the ratio falls to 20.00% — $4.00 a share stays in the business.

Earnings per share $4.00: Dividends per share $2.00; earnings per share $4.00; dividend payout ratio 50.00%; retained per share $2.00 (50.00% retained); dividends per share needed for the 50.00% target $2.00; earnings per share allowed for the 50.00% target $4.00 — With earnings per share of $4.00 the ratio rises to 50.00% — the target ratio itself — and $2.00 a share stays in the business.

Dividends per share $3.00: Dividends per share $3.00; earnings per share $5.00; dividend payout ratio 60.00%; retained per share $2.00 (40.00% retained); dividends per share needed for the 50.00% target $2.50; earnings per share allowed for the 50.00% target $6.00 — With dividends per share of $3.00 the ratio rises to 60.00% — $2.00 a share stays in the business.

Earnings per share $8.00: Dividends per share $2.00; earnings per share $8.00; dividend payout ratio 25.00%; retained per share $6.00 (75.00% retained); dividends per share needed for the 50.00% target $4.00; earnings per share allowed for the 50.00% target $4.00 — With earnings per share of $8.00 the ratio falls to 25.00% — $6.00 a share stays in the business.

Dividends per share $4.00: Dividends per share $4.00; earnings per share $5.00; dividend payout ratio 80.00%; retained per share $1.00 (20.00% retained); dividends per share needed for the 50.00% target $2.50; earnings per share allowed for the 50.00% target $8.00 — With dividends per share of $4.00 the ratio rises to 80.00% — only $1.00 a share stays in the business.

Earnings per share $2.50: Dividends per share $2.00; earnings per share $2.50; dividend payout ratio 80.00%; retained per share $0.50 (20.00% retained); dividends per share needed for the 50.00% target $1.25; earnings per share allowed for the 50.00% target $4.00 — With earnings per share of $2.50 the ratio rises to 80.00% — only $0.50 a share stays in the business.

Ratio bars — dividends per share $2.50, earnings per share $6.00, dividends per share $1.50: dividends per share $2.50: dividend payout ratio 50.00%, retained $2.50 (50.00% retained); earnings per share $6.00: dividend payout ratio 33.33%, retained $4.00 (66.67% retained); dividends per share $1.50: dividend payout ratio 30.00%, retained $3.50 (70.00% retained) — Dividends per share of $2.50 give a ratio of 50.00%; earnings per share of $6.00 give a ratio of 33.33%; dividends per share of $1.50 give a ratio of 30.00%.

The reverses, worked backwards

Smallest dividends per share for the ratio to reach 50.00%: At the displayed $2.50 the figures are Dividends per share $2.50; earnings per share $5.00; dividend payout ratio 50.00%; retained per share $2.50 (50.00% retained); dividends per share needed for the 50.00% target $2.50; earnings per share allowed for the 50.00% target $5.00. At the displayed $2.50 the ratio is 50.00% (exactly 50.00%). At $2.49 the ratio is 49.80% — below the 50.00% target — so $2.50 is the smallest whole-cent dividends per share for the ratio to reach 50.00%.

Largest earnings per share for the ratio to STAY at or above 50.00%: At the displayed $4.00 the figures are Dividends per share $2.00; earnings per share $4.00; dividend payout ratio 50.00%; retained per share $2.00 (50.00% retained); dividends per share needed for the 50.00% target $2.00; earnings per share allowed for the 50.00% target $4.00. At the displayed $4.00 the ratio is 50.00% (exactly 50.00%). At $4.01 the ratio is 49.88% (unrounded 49.8753% — print it) — below the 50.00% target — so $4.00 is the largest whole-cent earnings per share for the ratio to stay at or above 50.00%.

Smallest dividends per share for the ratio to reach 66.67%: At the displayed $4.01 the figures are Dividends per share $4.01; earnings per share $6.00; dividend payout ratio 66.8333%; retained per share $1.99 (33.17% retained); dividends per share needed for the 66.67% target $4.00; earnings per share allowed for the 66.67% target $6.01. At the displayed $4.01 the ratio is 66.83% (unrounded 66.8333% — print it). At $4.00 the ratio is 66.67% (unrounded 66.6667% — print it) — it displays as 66.67% but is below the 66.67% target — so $4.01 is the smallest whole-cent dividends per share for the ratio to reach 66.67%.

Largest earnings per share for the ratio to STAY at or above 66.67%: At the displayed $5.99 the figures are Dividends per share $4.00; earnings per share $5.99; dividend payout ratio 66.7780%; retained per share $1.99 (33.22% retained); dividends per share needed for the 66.67% target $3.99; earnings per share allowed for the 66.67% target $6.00. At the displayed $5.99 the ratio is 66.78% (unrounded 66.7780% — print it). At $6.00 the ratio is 66.67% (unrounded 66.6667% — print it) — it displays as 66.67% but is below the 66.67% target — so $5.99 is the largest whole-cent earnings per share for the ratio to stay at or above 66.67%.

Smallest dividends per share for the ratio to reach 25.00%: At the displayed $2.00 the figures are Dividends per share $2.00; earnings per share $8.00; dividend payout ratio 25.00%; retained per share $6.00 (75.00% retained); dividends per share needed for the 25.00% target $2.00; earnings per share allowed for the 25.00% target $8.00. At the displayed $2.00 the ratio is 25.00% (exactly 25.00%). At $1.99 the ratio is 24.88% (unrounded 24.8750% — print it) — below the 25.00% target — so $2.00 is the smallest whole-cent dividends per share for the ratio to reach 25.00%.

Largest earnings per share for the ratio to STAY at or above 25.00%: At the displayed $8.00 the figures are Dividends per share $2.00; earnings per share $8.00; dividend payout ratio 25.00%; retained per share $6.00 (75.00% retained); dividends per share needed for the 25.00% target $2.00; earnings per share allowed for the 25.00% target $8.00. At the displayed $8.00 the ratio is 25.00% (exactly 25.00%). At $8.01 the ratio is 24.97% (unrounded 24.9688% — print it) — below the 25.00% target — so $8.00 is the largest whole-cent earnings per share for the ratio to stay at or above 25.00%.

A warning about the neighbours: every neighbour above sits one cent from the star — one cent of dividends per share or one cent of earnings per share — and every neighbour displays as the target when rounded to two decimals, yet sits below or above it. The ratio is linear in whole cents, so the reverses have exact closed forms: the dividends per share needed is the target times the earnings per share, and the earnings per share allowed is the dividends per share divided by the target. The page prints the unrounded ratios in full so the rounding does not mislead you: 49.8753, 66.8333, 66.7780, 66.6667, 24.8750 and 24.9688.

What the defaults assume

The defaults are $2.00 of dividends per share, $5.00 of earnings per share and a target ratio of 50.00% — Dividends per share $2.00; earnings per share $5.00; dividend payout ratio 40.00%; retained per share $3.00 (60.00% retained); dividends per share needed for the 50.00% target $2.50; earnings per share allowed for the 50.00% target $4.00. With Dividends per share $1.00, Dividends per share $1.00; earnings per share $5.00; dividend payout ratio 20.00%; retained per share $4.00 (80.00% retained); dividends per share needed for the 50.00% target $2.50; earnings per share allowed for the 50.00% target $2.00. With Earnings per share $4.00, Dividends per share $2.00; earnings per share $4.00; dividend payout ratio 50.00%; retained per share $2.00 (50.00% retained); dividends per share needed for the 50.00% target $2.00; earnings per share allowed for the 50.00% target $4.00. With Dividends per share $3.00, Dividends per share $3.00; earnings per share $5.00; dividend payout ratio 60.00%; retained per share $2.00 (40.00% retained); dividends per share needed for the 50.00% target $2.50; earnings per share allowed for the 50.00% target $6.00. With Earnings per share $8.00, Dividends per share $2.00; earnings per share $8.00; dividend payout ratio 25.00%; retained per share $6.00 (75.00% retained); dividends per share needed for the 50.00% target $4.00; earnings per share allowed for the 50.00% target $4.00. With Dividends per share $4.00, Dividends per share $4.00; earnings per share $5.00; dividend payout ratio 80.00%; retained per share $1.00 (20.00% retained); dividends per share needed for the 50.00% target $2.50; earnings per share allowed for the 50.00% target $8.00. With Earnings per share $2.50, Dividends per share $2.00; earnings per share $2.50; dividend payout ratio 80.00%; retained per share $0.50 (20.00% retained); dividends per share needed for the 50.00% target $1.25; earnings per share allowed for the 50.00% target $4.00. With Ratio bars, dividends per share $2.50: dividend payout ratio 50.00%, retained $2.50 (50.00% retained); earnings per share $6.00: dividend payout ratio 33.33%, retained $4.00 (66.67% retained); dividends per share $1.50: dividend payout ratio 30.00%, retained $3.50 (70.00% retained). With Dividends per share $0, Dividends per share $0.00; earnings per share $5.00; dividend payout ratio 0.00%; retained per share $5.00 (100.00% retained); dividends per share needed for the 50.00% target $2.50; earnings per share allowed for the 50.00% target $0.00 — nothing paid out, so everything stays in the business. With Earnings per share $0, Dividends per share $2.00; earnings per share $0.00; dividend payout ratio undefined — there are no earnings to pay from, so there is nothing to divide by — the ratio is undefined, shown as undefined with that note, never a crash and never a made-up number. With Dividends per share $2.00, earnings per share $6.00, Dividends per share $2.00; earnings per share $6.00; dividend payout ratio 33.3333%; retained per share $4.00 (66.67% retained); dividends per share needed for the 50.00% target $3.00; earnings per share allowed for the 50.00% target $4.00 (unrounded 33.3333% — displays 33.33% but is above 33.33% unrounded). With Dividends per share $4.00, earnings per share $6.00, Dividends per share $4.00; earnings per share $6.00; dividend payout ratio 66.6667%; retained per share $2.00 (33.33% retained); dividends per share needed for the 50.00% target $3.00; earnings per share allowed for the 50.00% target $8.00 (unrounded 66.6667% — displays 66.67% but is below 66.67%). With Dividends per share $6.00, earnings per share $5.00, Dividends per share $6.00; earnings per share $5.00; dividend payout ratio 120.00%; retained per share −$1.00 (−20.00% retained); dividends per share needed for the 50.00% target $2.50; earnings per share allowed for the 50.00% target $12.00 — the company paid out more than it earned, so the retained per share is −$1.00. With Dividends per share $2.00, earnings per share −$5.00, Dividends per share $2.00; earnings per share −$5.00; dividend payout ratio −40.00%; retained per share −$7.00 (140.00% retained); dividends per share needed for the 50.00% target −$2.50; earnings per share allowed for the 50.00% target $4.00 — negative earnings, shown with a note, never hidden. With Ratio bars, dividends per share $2.50: dividend payout ratio 50.00%, retained $2.50 (50.00% retained); earnings per share $6.00: dividend payout ratio 33.33%, retained $4.00 (66.67% retained); dividends per share $1.50: dividend payout ratio 30.00%, retained $3.50 (70.00% retained).

A note on the rounding: the ratio is displayed to two decimals, half-up. At $4.01 of earnings per share the unrounded ratio is 49.8753% — it displays as 49.88% but is below the 50.00% target. At $4.01 of dividends per share the unrounded ratio is 66.8333% — it displays as 66.83%. At $4.00 of dividends per share on $6.00 of earnings the unrounded ratio is 66.6667% — it displays as 66.67% but is below the 66.67% target. At $1.99 of dividends per share the unrounded ratio is 24.8750% — it displays as 24.88% but is below the 25.00% target. At $8.01 of earnings per share the unrounded ratio is 24.9688% — it displays as 24.97% but is below the 25.00% target. At $2.00 of dividends per share on $6.00 of earnings the unrounded ratio is 33.3333% — it displays as 33.33% but is above 33.33% unrounded. At $5.99 of earnings per share the unrounded ratio is 66.7780% — it displays as 66.78%. The page prints the unrounded ratios so the rounding does not mislead you.

Output · formula · meaning

Who uses this

• The income investor checking a dividend: they learn $2.00 of dividends per share on $5.00 of earnings per share is a payout of 40.00% — and they check the $2.50 reverse to see the dividends per share a 50.00% payout needs.
• The analyst screening for dividend cuts: they learn a rising ratio on falling earnings is the classic dividend-cut warning — and they check the $4.00 reverse to see the earnings per share a 50.00% payout allows.
• The student learning payout measures: they learn the dividend payout ratio is dividends per share divided by earnings per share — and they check the $4.01 reverse to see the dividends per share a 66.67% payout needs.
• The retiree living off dividends: they learn a 40.00% payout keeps 60.00% in the business — and they check the $8.00 reverse to see the earnings per share a 25.00% payout allows.

Accuracy & limitations

The math is first-principles: the dividend payout ratio is dividends per share divided by earnings per share × 100; the retained per share is earnings per share minus dividends per share; the retention ratio is 100% minus the payout ratio; the dividends per share needed for the target is the target ratio times earnings per share; the earnings per share allowed for the target is dividends per share divided by the target ratio — all in whole cents, the ratio displayed to two decimals half-up. This page uses PER-SHARE figures — dividends per share divided by earnings per share — but total dividends divided by net income gives the same answer. At $0 of earnings per share the ratio is UNDEFINED — there are no earnings to pay from, so there is nothing to divide by — the page shows the ratio as undefined with that note, never a crash and never a made-up number, and no retained-per-share figure is printed for that case. At −$5.00 of earnings per share the ratio is −40.00% — negative earnings means the company lost money yet still paid a dividend — a data problem, not a real payout — so the ratio is negative and the calculator shows the negative figure with a note, never hides it and never shows “—” for it. At $6.00 of dividends per share on $5.00 of earnings per share the ratio is 120.00% — paying out more than the company earned is possible only from reserves or borrowing, and cannot last — the calculator shows the 120.00% figure with a note, never hides it. What the model cannot do is judge the dividend: the ratio says nothing about whether the dividend is safe, whether earnings are real or one-off, or whether the company is borrowing to pay it — a payout ratio that jumps because earnings fell — not because the dividend rose — is a warning, not a windfall. A high ratio is not automatically generous: a company with a 90% payout and no growth keeps nothing to invest, while a company with a 20% payout that grows fast can be worth more in the long run. The ratio differs from dividend yield: yield is dividends per share divided by the share PRICE — it tells you the income on the price you pay — while the payout ratio is dividends per share divided by EARNINGS — it tells you whether the dividend is affordable. The ratio differs from the retention ratio: retention is one minus the payout — the share kept — so a 40.00% payout is a 60.00% retention. Sustainable growth is roughly return on equity times the retention ratio, which is why a low payout can mean faster growth. Buybacks are the other way cash returns to shareholders: a company that pays a 20% dividend and buys back shares can return more cash than one paying a 40% dividend and buying back nothing. Use it to see what share of the profit is paid out — then check whether the earnings behind it are real.

Frequently asked questions