What Is Dividend Payout Ratio?
Definition and plain-English explanation of "Dividend Payout Ratio"
The dividend payout ratio is the percentage of a company's earnings paid out to shareholders as dividends. A ratio of 50% means half of profits are distributed. A very high payout ratio (above 80%) can be unsustainable, while a low ratio leaves room for the dividend to grow and for reinvestment in the business.
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