Equity / Dividend Metric

Dividend Payout Ratio

Definition

The percentage of earnings paid out as dividends to shareholders. A higher ratio means more income returned to shareholders, while a lower ratio means more earnings are retained for growth.

Formula / Rules
Dividends Per Share / EPS × 100
Example
$2 dividends and $5 EPS equals a 40% payout ratio.
Related Terms
Dividend Yield Earnings Per Share (EPS) Retention Ratio
Frequently Asked Question
What is Dividend Payout Ratio?
Dividend Payout Ratio measures the share of earnings returned to shareholders as dividends. A sustainable payout ratio typically ranges from 30–60% depending on the industry.
APA Citation
Clark, R. (2025). Dividend Payout Ratio. VixShield Trading Glossary. Retrieved from https://www.vixshield.com/glossary/dividend-payout-ratio
RC
Russell Clark, FNP-C
Author of SPX Mastery series · Founder of VixShield
Last updated:  ·  Source: VixShield Trading Glossary — From SPX Mastery by Russell Clark
⚠️ Not financial advice. This definition is educational content from the SPX Mastery book series by Russell Clark (VixShield). Past performance is not indicative of future results. Trading options involves substantial risk of loss and is not appropriate for all investors. Always paper trade before risking real capital.