BNET Business Dictionary
Business Definition for: Payout Ratio
- an expression of the total dividends paid to stockholders as a percentage of a company's net profit in a given period of time. This measures the likelihood of dividend payments being sustained, and is a useful indication of sustained profitability. The lower the ratio, the more secure the dividend, and the company's future.
Example: The payout ratio is calculated by dividing annual dividends paid on common stock by earnings per share:Annual dividend / Earnings per share = Payout ratioTake the company whose earnings per share is $8 and its dividend payout is 2.1. Its payout ratio would be:2.1 / 8 = 0.263 or 26.3%A high payout ratio clearly appeals to conservative investors seeking income. When coupled with weak or falling earnings, however, it could suggest an imminent dividend cut, or that the company is short-changing reinvestment to maintain its payout. A payout ratio above 75% is a warning. It suggests the company is failing to reinvest sufficient profits in its business, that the company's earnings are faltering, or that it is trying to attract investors who otherwise would not be interested.
- See also Dividend Cover
Additional Resources
- Markland Technologies Announces Technest Holdings Common Stock Dividend Payout Ratio
- Markland Technologies, Inc. (PINKSHEETS: MRKL), a company transforming advanced laboratory technology into real-world products, announced today the payout ratio for its planned dividend of shares of Technest Holdings Inc. common stock. Markland common stock holders of record on May 1, 2006 will receive 1 share of Technest common stock for...
- Research articles 2006-07-05
- BB&T Corp.: Quarterly Dividend Up; Projected Payout Ratio Down
- David I. Templeton submits: BB&T Corp BBT announced a penny increase in the company's quarterly dividend. The new quarterly dividend increases to $0.47 per share versus $0.46 per share in the same quarter last year. It is encouraging to see the company come through with an increase, but the...
- External links 2008-12-18
- Westpac to boost payout ratio.
- Byline: Stewart Oldfield Apr 04, 2006 (The Australian Financial Review - ABIX via COMTEX) -- Some brokers anticipate that Westpac Banking may implement a "step-change" in its dividend policy. ...
- Research articles 2006-04-04
- Enterra Energy Trust Nears Completion of Transformation Plan; Distribution Payout Lowered for Investment in Organic Growth
- CALGARY, Alberta -- Enterra Energy Trust ("Enterra" or the "Trust") (NYSE: ENT) (TSX: ENT-UN) announced today the next step in its plan to transform Enterra's business model and strategy for growth and long term sustainability. In order to increase funding for internal development opportunities, Enterra has reduced its target payout...
- Research articles 2006-07-18
- Calculating Dividend Cover
- Dividend cover measures a company's ability to pay dividends to stockholders. Specifically, it calculates how many times over the company's net after-tax profits could have paid for dividends to its common stockholders.A similar calculation, payout ratio identifies the percentage of net profit paid to stockholders in the form of dividends,...
- Articles 2007-07-30
- R.H. Donnelley Corp. Q3 2007 Earnings Call Transcript
- Question-and-Answer SessionOperator Thank you. We will now begin the question and answer session Operator Instructions. Our first question is from Michael Meltz - Bear Stearns. Michael Meltz - Bear Stearns Thank you. I think I have three questions. Can you talk a little bit about the dividend and...
- Earnings calls 2007-10-25
- Higher Yield, Safe Returns: Best Investment Bets
- Money-market funds are now paying next to nothing. Boost your returns by moving some cash into higher-yielding but still relatively safe dividend stocks or bond funds. Here are five stocks and five funds that we like. ...
- Articles 2009-08-13
- Tanger Outlet Centers Q1 2008 Earnings Call Transcript
- Earnings Call ExcerptTanger Outlet Centers SKT Q1 2008 Earnings Call May 1, 2008 10:00 am ET Executives Stanley K. Tanger- Chairman, CEO, and Founder Steven B. Tanger- President and COO Frank Marschisello, Jr. - Executive VP and CFO Analysts Christy McElroy- Banc of America Securities Michael Bilerman- Citigroup Jonathan...
- Earnings calls 2008-05-01
- Marshall & Ilsley Corporation F3Q07 (Qtr End 09/30/07) Earnings Call Transcript
- Question-and-Answer Session Operator Thank you. For analysts who would like to ask a question, you will be able to do so during the Q&A. [Operator Instructions]. Your first question comes from the line of Scott Siefers. Scott Siefers - Sandler O'Neill & Partners, LP Good...
- Earnings calls 2007-10-17
- Felcor Lodging Trust Incorporated Q2 2008 Earnings Call Transcript
- Question-and-Answer Session Operator Operator Instructions Your first question comes from Jeffrey J. Donnelly – Wachovia Securities. Jeffrey J. Donnelly – Wachovia Securities Andy, maybe you can talk a little bit more in detail on the thinking behind the $0.15 quarterly dividend. I know you touched on it...
- Earnings calls 2008-08-24
- Chunghwa Telecom Co., Ltd. Q2 2007 Earnings Call Transcript
- Question-and-Answer SessionOperator Now, we are going to the question-and-answer session. [Operator Instructions]. Hi you are on the line; go ahead please. Anand Ramachandran - Citigroup Yes. Hi, can you hear me? Operator Yes please. Anand Ramachandran - Citigroup Thank you. Good evening....
- Earnings calls 2007-09-16
- SunTrust Banks, Inc. Q1 2008 Earnings Call Transcript
- Question-and-Answer SessionOperator [Operator Instructions] Our first question today is from Brian Foran you may ask your question and please state your company name. Brian Foran – Goldman Sachs Can you talk a little bit about the dividend payout ratio that you are comfortable with in the short term and...
- Earnings calls 2008-04-22
- AU Optronics Q3 2007 Earnings Call Transcript
- Question-and-Answer Session Operator [Operator Instructions]. Your first question comes from the line of Andrew Abrahams from Avian Securities. Please proceed. Andrew Abrahams - Avian Securities Hi, congratulations on an excellent quarter. And I was wondering if you could give a little more detail on...
- Earnings calls 2007-10-22
- Earnings and Expected Returns
- The aggregate dividend payout ratio forecasts aggregate excess returns on both stocks and corporate bonds in post-war US data. Both high corporate profits and high stock prices forecast low excess returns on equities. When the payout ratio is high, expected returns are high. The payout ratio's correlation with business conditions...
- White papers 1996-10-16
- Q3 Lifts Optimism For HSBC Dividend
- LONDON (Reuters UK) - HSBC's HSBA upbeat earnings guidance this week has lifted optimism Europe's biggest bank could pay a higher-than-expected 2009 dividend, at a time of scarce payouts for investors from the financial sector.HSBC shares were up 1.7 percent at 745 pence, outpacing a 0.2 percent rise in the...
- News items 2009-11-13
- The Bank of New York Mellon Corporation Q3 FY07 Earnings Call Transcript
- Question-and-Answer SessionOperator Thank you. [Operator Instructions]. Our first question comes from Glenn Schorr with UBS. Please go ahead. Glenn Schorr - UBS Hey guys. Robert P. Kelly - Chief Executive Officer Good morning Glenn. Glenn Schorr - UBS so I guess it's...
- Earnings calls 2007-10-18
- HRPT Properties Trust Q1 2008 Earnings Call Transcript
- Question-and-Answer SessionThank you very much. [Operator Instructions]. The first question is from Michael Bilerman from Citigroup. Please proceed with your question, sir. Michael Bilerman - Citigroup Hi. Good morning. Alan is on the phone with me as well. Adam, maybe you can just walk through the decision of selling...
- Earnings calls 2008-05-08
- Consolidated Communications Holdings, Inc. Q4 2008 Earnings Call Transcript
- Question-and-Answer Session Operator Operator Instructions. Your first question comes from the line of Frank Louthan with Raymond James. Frank Louthan – Raymond James Good morning. I got several question sort of all getting around the same thing I can appreciate where can you give me guidance what has...
- Earnings calls 2009-03-12
- Inter Pipeline Fund Announces Second Quarter 2005 Results.
- CALGARY, ALBERTA, Aug 11, 2005 CCNMatthews via COMTEX -- Inter Pipeline Fund (TSX:IPL.UN) ("Inter Pipeline") announced today its financial and operating results for the three and six month period ended June 30, 2005. Highlights - Cash flow from operations(1)...
- Research articles 2005-08-11
- Dover Corporation Increases Dividend
- David I. Templeton submits: Today, Dover Corp. DOV announced it was increasing its 3rd quarter dividend by 4%. The new quarterly dividend increases to 26 cents per share versus 25 cents per share in the same period last year. The estimated payout ratio on the new dividend increases to 57%...
- External links 2009-08-07
