Enter a company's dividend per share and earnings per share to see what portion of profits it pays out, how much it keeps, and whether the dividend looks sustainable. Free, no signup.
Short answer
Payout ratio is dividends divided by earnings, times 100. Example: $2 paid from $5 earned is a 40% payout ratio. Above 100% means the dividend exceeds earnings.
Tip: you can use the company's total dividends and net income instead of the per-share figures — the ratio comes out the same.
Payout ratio
40.0%
Retention ratio
60.0%
The share of earnings kept to reinvest, pay down debt, or buy back stock.
Assessment
Conservative — lots of room to grow
Educational tool only - not financial advice. Figures are projections from your assumptions, not predictions.
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The payout ratio is the share of a company’s earnings paid out as dividends: dividend per share ÷ earnings per share × 100 (or total dividends ÷ net income). A company earning $5 a share and paying $2 has a 40% payout ratio.
It depends on the industry, but 40–60% is generally considered healthy for a growing company — enough to reward shareholders while retaining earnings to reinvest. Mature, stable businesses can comfortably run higher, while a ratio under 40% leaves plenty of room for future dividend increases.
A ratio above 100% means the company is paying out more in dividends than it earns, funding the difference from cash reserves, borrowing, or selling assets. That is rarely sustainable, and it often precedes a dividend cut.
Not the standard EPS-based one. REITs and many other high-yield vehicles are better measured against funds from operations (FFO) rather than earnings per share, because large non-cash depreciation charges depress reported EPS and make the EPS payout ratio look artificially high.
Keep going
A sustainable payout ratio is only half the story — check the yield, how fast the dividend is growing, and what you'll keep after tax.