Payout ratio
Personal Finance
A payout ratio, expressed as a percentage, is the rate at which a company distributes earnings to its shareholders in the form of dividends.
For example, a company that earns $5 a share and pays out $2 a share has a payout ratio of 2 to 5, or 40%.
A normal range for companies that do pay dividends is 25% to 50% of earnings. But the percentage may vary if a company keeps the amount of its dividend consistent with past dividends regardless of a drop in its earnings.