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How to calculate Payout ratio

The Payout ratio formula, with plain worked examples you can check yourself.

Payout ratio = DPS ÷ EPS × 100

The result is a percentage (%).

Worked examples

DPS = 7.5 · EPS = 10Payout ratio = 75%
DPS = 5 · EPS = 10Payout ratio = 50%
DPS = 3 · EPS = 4Payout ratio = 75%

How to use it

  1. Write down the values for each letter in the formula.
  2. Do the brackets first, then divide or multiply.
  3. Multiply by 100 to show the answer as a percentage.
  4. Compare the answer with last period or with a competitor to see if it is good or bad.

This formula belongs to Investing & Returns.

Related terms

DividendBondHedgingArbitrageLeverageAsset allocation

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