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Dividend Payout Ratio
The dividend payout ratio is the percentage of the company's profits that is paid out in dividends.
About the Ratio
- Low ratio indicates that profits are primarily reinvested for growth
- Newer companies
- Companies expected accelerated growth
- High ratio indicates that profits are being given to shareholders.
- Established companies
- Companies not expected to grow at an accelerated page
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Example: Dividend Payout Ratio
In 2019, Apple Inc. reported EPS of $11.97 and paid $3.08 in dividends. The current market price of the stock is $364.11.
What is the company's payout ratio?
Practice: Payout Ratio
Compute the payout for the year 2020. Do not round your work, round your final answer to 4 decimal places and enter you answer in decimal form.
Additional information:
- On May 31, 2020 the market price per common share was $98.58.
- The average number of outstanding common shares is 1,558.8 million shares
- The company pays annual dividends of $0.955 per common share.
