Calculate the dividend payout ratio, retention ratio, FCF payout, and dividend sustainability. Compare across sectors with scenario analysis.
The dividend payout ratio tells you what percentage of a company's earnings is distributed to shareholders as dividends. It is one of the most important metrics for dividend investors because it directly measures how sustainable the dividend is.
A payout ratio of 50% means the company pays out half its earnings and retains the other half for growth. A very low ratio (under 30%) means the company prioritizes reinvestment, while a very high ratio (over 80%) may indicate the dividend is at risk if earnings decline.
This calculator computes the payout ratio using both EPS and net income methods, adds FCF payout analysis (which is often more revealing than earnings-based ratios), and includes sector benchmarks so you can compare the company's payout against industry norms. The scenario analysis table shows how changing the payout percentage affects the dividend per share and implied yield. The example uses a mid-range payout so you can see how coverage and retention behave at a sustainable level.
A high dividend yield is meaningless if the payout ratio indicates the dividend is unsustainable. This calculator helps you evaluate dividend safety by computing payout ratios from multiple angles (EPS, net income, FCF) and comparing against sector norms. It is useful when you want to see whether the dividend is supported by earnings and cash flow rather than just current yield.
Payout Ratio = Dividend Per Share / Earnings Per Share × 100 Retention Ratio = 1 − Payout Ratio FCF Payout = Total Dividends / Free Cash Flow × 100 Dividend Coverage = EPS / DPS
Result: Payout Ratio = 50%
With EPS of $5.00 and DPS of $2.50, the payout ratio is 50%, which is considered sustainable for most sectors. The retention ratio is also 50%, and dividend coverage is 2.0×.
Earnings-based payout ratios are useful, but free-cash-flow payout is often the better stress test because it shows whether the dividend is backed by actual cash generation. When the two ratios diverge, the dividend may be more fragile than the headline EPS figure suggests.
Utilities, telecoms, and REITs often support higher payout ratios than cyclical or high-growth companies because their business models are built around distributing cash. Compare the result against the sector benchmark before deciding whether the dividend is excessive.
A payout ratio near 100% leaves little cushion if earnings fall. Pair the ratio with dividend coverage and free cash flow trends to see whether the dividend has room to grow or is already stretched.
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The page calculates payout ratio in several ways from the user's inputs: dividend per share divided by earnings per share, total dividends divided by net income, and total dividends divided by free cash flow. It also derives retention ratio, dividend yield from stock price, and dividend coverage as `EPS / DPS`, then shows scenario outputs by applying alternative payout percentages to the entered EPS and stock price.
Those ratio calculations are formula-based, but the sustainability labels and sector ranges are only planning heuristics. They are not official credit opinions or universal payout standards, since acceptable payout levels vary by business model, tax structure, and board policy.
It depends on the sector. Under 60% is generally sustainable for most companies. REITs are required to pay 90%+ and are evaluated differently. Sector context matters more than one universal cutoff.
The retention ratio (1 − payout ratio) shows what percentage of earnings is kept by the company for growth and debt reduction. It is the complement of the payout ratio and is helpful when you want to judge how much capital remains for reinvestment.
Earnings can be manipulated through accounting. Free cash flow represents actual cash generated, making FCF payout a more reliable sustainability measure. That makes it a stronger stress test for the dividend.
Yes, if the company pays more in dividends than it earns. This is unsustainable long-term and may indicate an upcoming dividend cut. The ratio is a warning sign, not just a label.
Coverage is EPS divided by DPS. A coverage of 2× means earnings are double the dividend. Below 1× means the company is paying from reserves. Higher coverage usually means more room to sustain the payout.
Yes. REITs must distribute at least 90% of taxable income, so payout ratios near or above 90% are normal and expected for this sector. The standard payout rule for operating companies does not apply the same way.