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.
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
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.