Dividend Payout Ratio Calculator
The payout ratio divides total dividends by net income. It shows how much profit goes back to shareholders versus how much is retained for reinvestment. A low ratio leaves more cash for growth; a high ratio favors returning cash to shareholders.
Your numbers
Payout ratio
30%
Retention ratio
70%
What it means
The payout ratio is 30%. Most of the profit is being kept for reinvestment.
Formula
Payout ratio = Total dividends ÷ Net income × 100
A company can keep paying dividends from past retained earnings even in a loss year, which can push the ratio above 100% or make it negative. Growth companies tend to run low payout ratios and mature dividend payers run high ones — there is no single "right" level across industries.
What to enter
| Input | Default | Accepted range |
|---|---|---|
| Total dividendsTotal dividends paid to shareholders over the year. | 300,000,000 | 0 and up |
| Net incomeWhat is left after every cost and tax is subtracted from revenue. | 1,000,000,000 | 1 and up |
Step by step
Quick reference table
Results when only Total dividends changes and everything else stays put.
| Total dividends | Payout ratio (%) | Retention ratio (%) |
|---|---|---|
| 150,000,000 | 15 | 85 |
| 225,000,000 | 22.5 | 77.5 |
| 300,000,000 | 30 | 70 |
| 450,000,000 | 45 | 55 |
| 600,000,000 | 60 | 40 |
What each result means
| Result | At default values |
|---|---|
| Payout ratio (%)The share of net income paid out as dividends; the rest stays in the company. | 30 |
| Retention ratio (%)The share of net income kept in the company instead of paid out. | 70 |
Common mistakes
A company can keep paying dividends from past retained earnings even in a loss year, which can push the ratio above 100% or make it negative. Growth companies tend to run low payout ratios and mature dividend payers run high ones — there is no single "right" level across industries.
Glossary
- Total dividends
- Total dividends paid to shareholders over the year.
- Net income
- What is left after every cost and tax is subtracted from revenue.
- Payout ratio
- The share of net income paid out as dividends; the rest stays in the company.
- Retention ratio
- The share of net income kept in the company instead of paid out.
Frequently asked questions
QHow is Dividend Payout Ratio Calculator calculated?
Payout ratio = Total dividends ÷ Net income × 100 — The payout ratio divides total dividends by net income. It shows how much profit goes back to shareholders versus how much is retained for reinvestment. A low ratio leaves more cash for growth; a high ratio favors returning cash to shareholders.
QCan you walk through an example?
With Total dividends 300,000,000, Net income 1,000,000,000, the answer is Payout ratio 30%.
QWhat do I need to enter?
Enter Total dividends, Net income. The result recalculates as you type, and an empty box counts as zero.
QHow much does the answer move if I change a number?
Changing only Total dividends moves the answer to Total dividends 150,000,000 → Payout ratio (%) 15 and Total dividends 600,000,000 → Payout ratio (%) 60. The table below lays out five steps.
QHow are the numbers rounded?
Money is shown to the nearest whole unit, percentages to one decimal place and everything else to two. What you see is rounded; the calculation itself carries the unrounded value forward.
QAnything to watch out for?
A company can keep paying dividends from past retained earnings even in a loss year, which can push the ratio above 100% or make it negative. Growth companies tend to run low payout ratios and mature dividend payers run high ones — there is no single "right" level across industries.
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