Dividend Payout Ratio Calculator
See what share of a company’s earnings goes to its dividend — and whether that payout looks sustainable or stretched.
How the payout ratio is calculated
The formula is dividends ÷ earnings. Use per-share numbers (dividend per share over earnings per share) or company totals (total dividends over net income) — the ratio is identical either way.
A lower ratio leaves more profit retained to reinvest, pay down debt, or raise the dividend later. As the ratio climbs toward and past 100%, the dividend has less cushion: a single weak year can force a cut. The calculator flags the band your inputs fall into, from comfortable to unsustainable.
One big caveat: REITs, BDCs, and MLPs are built to distribute most of their cash flow and routinely report payout ratios above 100% of GAAP earnings. For those, compare the dividend to FFO/AFFO (REITs), net investment income (BDCs), or distributable cash flow (MLPs) instead. The full payout-ratio guide walks through each case.
Frequently asked questions
- What is the dividend payout ratio?
- The payout ratio is the share of a company’s earnings paid out as dividends — dividends divided by earnings. A 50% payout ratio means half of profit is returned to shareholders and half is retained. It works the same with per-share figures (dividend per share ÷ earnings per share) or totals (total dividends ÷ net income).
- What is a good payout ratio?
- There is no single right number, but as a rough guide: under 50% is comfortable and leaves room to keep raising the dividend; 50–75% is typical for mature payers; 75–100% is sustainable but tight; and above 100% means the company is paying out more than it earns, which often precedes a cut.
- Can the payout ratio be over 100%?
- Yes, and it is a warning sign for an ordinary company — it is funding the dividend from cash reserves, debt, or asset sales rather than current profit. The exception is REITs, BDCs, and MLPs, which are structured to distribute most of their cash flow and routinely show ratios above 100% of GAAP earnings.
- Why does my REIT show a payout ratio above 100%?
- REITs are required to distribute at least 90% of taxable income and report large non-cash depreciation that depresses GAAP earnings. Their dividend should be compared to funds from operations (FFO) or adjusted FFO (AFFO), not net income. The same applies to BDCs (net investment income) and MLPs (distributable cash flow).
- What is the retention ratio?
- The retention ratio is the flip side of the payout ratio — the share of earnings kept inside the business (1 − payout ratio). Retained earnings fund growth, debt reduction, and buybacks, which can support future dividend increases.