1. What is Payout per Share?

The Payout per Share (or Dividend Payout Ratio) shows the percentage of earnings paid out as dividends to shareholders. It helps investors understand how much money a company returns to shareholders versus how much it keeps for growth.

2. How Does the Calculator Work?

The calculator uses the simple formula:

Where:

• \( DPS \) — Dividend Per Share (USD)
• \( EPS \) — Earnings Per Share (USD)

Explanation: This ratio indicates what portion of earnings is being distributed to shareholders. A lower ratio may suggest the company is reinvesting more in growth, while a higher ratio may indicate a mature company returning profits to shareholders.

3. Importance of Payout Ratio

Details: The payout ratio helps investors assess dividend sustainability. Ratios consistently above 100% may be unsustainable long-term, while very low ratios might disappoint income-focused investors.

4. Using the Calculator

Tips: Enter both DPS and EPS in USD. Both values must be positive numbers. The result is expressed as a decimal (e.g., 0.45 means 45% of earnings are paid as dividends).

5. Frequently Asked Questions (FAQ)

Q1: What's a good payout ratio?
A: This varies by industry. Generally, 30-50% is considered balanced, allowing both dividend payments and reinvestment.

Q2: Can payout ratio exceed 100%?
A: Yes, but this means the company is paying out more than it earns, which may be unsustainable long-term.

Q3: How does this differ from dividend yield?
A: Dividend yield compares dividends to stock price, while payout ratio compares dividends to earnings.

Q4: Should I prefer high or low payout ratios?
A: It depends on your investment goals - income investors may prefer higher ratios, while growth investors might prefer lower ratios.

Q5: How often should I check this ratio?
A: Review it quarterly with earnings reports, but look at long-term trends rather than single quarters.