Dividend Payout Ratio Calculator
Find what percentage of net profit a company returns to shareholders as dividends versus retaining for reinvestment. Enter total dividends paid and net income to get the payout ratio, retention ratio and retained earnings.
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Percentage of net income paid out as dividends
40%
payoutDividends paid
40%
Retained earnings
60%
- 1
Payout fraction
40,000 ÷ 100,000 = 0.4 - 2
Payout ratio
0.4 × 100 = 40
How does this calculator work?
Dividend Payout Ratio = Dividends Paid / Net Income × 100. Retention Ratio = 100 − Payout Ratio. A 40% payout ratio means 40% of profit goes to shareholders, 60% is retained. Ratios above ~80–90% may be unsustainable; REITs typically pay out more than 90% by design.
Formula
How this is calculated
The dividend payout ratio measures the fraction of a company's net income that is distributed to shareholders as dividends. A ratio of 40% means 40 cents of every dollar earned goes to shareholders, with the remaining 60 cents retained in the business. The retention ratio (also called the ploughback ratio) is simply 1 minus the payout ratio.
A very high payout ratio (above ~80–90%) can signal that the dividend may be unsustainable if earnings decline, because it leaves little buffer or room for reinvestment. A very low ratio suggests the company is reinvesting heavily for growth but paying little income. Many analysts look for a middle ground — typically 30–60% for mature dividend-paying companies.
Note that payout ratio uses accounting net income, which can be distorted by one-time items. Some analysts prefer to use free cash flow to equity instead for a more conservative view of dividend sustainability. This calculator uses net income as reported.
Frequently asked questions
It depends on the industry and growth stage. Mature companies often target 40–60%. A ratio above 80–90% may be unsustainable; REITs are a notable exception where high payouts are structurally required. A ratio below 20% suggests heavy reinvestment over income.
The retention ratio (100% minus the payout ratio) is the share of net income kept within the business for reinvestment, debt repayment or as a cash buffer. Higher retention ratios are associated with faster internal growth.
Yes — if a company pays out more in dividends than it earns in net income, the ratio exceeds 100%. This is funded from reserves or debt and is generally unsustainable unless it is a deliberate one-time distribution.
Also known as
TG we-Calculate Editorial Team. (2026). Dividend Payout Ratio Calculator [Online calculator]. TG we-Calculate. https://we-calculate.com/calculator/dividend-payout-ratio-calculator
TG we-Calculate Editorial Team. "Dividend Payout Ratio Calculator." TG we-Calculate. 2026. https://we-calculate.com/calculator/dividend-payout-ratio-calculator.
TG we-Calculate Editorial Team, "Dividend Payout Ratio Calculator," TG we-Calculate, 2026. [Online]. Available: https://we-calculate.com/calculator/dividend-payout-ratio-calculator
@misc{wecalculate_dividend_payout_ratio_calculator, title = {Dividend Payout Ratio Calculator}, author = {{TG we-Calculate Editorial Team}}, howpublished = {\url{https://we-calculate.com/calculator/dividend-payout-ratio-calculator}}, year = {2026}, note = {TG we-Calculate} }
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