1. What is Dividend Payout Ratio Calculator?

Definition: This calculator determines the DPR, the % of NI or EPS paid out as dividends.

Purpose: Helps investors assess dividend sustainability and company growth potential.

2. How Does the Calculator Work?

The calculator supports two modes:

Total Mode:

Where:

• \( D \): Total Dividends Paid (dollars)
• \( NI \): Net Income (dollars)

Per Share Mode:

Where:

• \( DPS \): Dividends per Share (dollars/share)
• \( EPS \): Earnings per Share (dollars/share)

Steps:

• Select the mode (Total or Per Share).
• Enter D and NI, or DPS and EPS.
• Calculate DPR as a %.
• Display with 2 decimal places.

3. Importance of DPR

Calculating DPR is crucial for:

• Investment: Indicates dividend sustainability vs. growth.
• Health: Near 100% means all NI paid out; low means reinvestment.
• Context: Varies by industry (e.g., 60-75% for mature firms).

4. Using the Calculator

Example 1 (Total): D = $50,000, NI = $200,000:

• D: $50,000
• NI: $200,000
• DPR: \( \frac{50,000}{200,000} \times 100 = 25.00\% \)
• Result: \( 25.00\% \)

Example 2 (Per Share): DPS = $2.50, EPS = $4.00:

• DPS: $2.50
• EPS: $4.00
• DPR: \( \frac{2.50}{4.00} \times 100 = 62.50\% \)
• Result: \( 62.50\% \)

Example 3 (Total, High): D = $120,000, NI = $150,000:

• D: $120,000
• NI: $150,000
• DPR: \( \frac{120,000}{150,000} \times 100 = 80.00\% \)
• Result: \( 80.00\% \) (High, may be unsustainable)

5. Frequently Asked Questions (FAQ)

Q: What is a good DPR?
A: Varies; 60-75% for mature firms, <50% for growth firms; >80% may be risky.

Q: DPR vs. Yield?
A: DPR is % of earnings paid as dividends; yield is dividends/stock price.

Q: Can DPR > 100%?
A: Yes, if D > NI, but rare, indicating borrowing or reserves use.

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