Cash Dividend Payout Ratio

Browse all terms in Glossary

Definition

Proportion of cashflow paid as dividends to common shareholders. This ratio gives an idea as to whether or not a company will continue to make future dividend payments.

Formula

Cash Dividend Payout Ratio = Common Stock Dividends / (Cash Flow from Operations - Capital Expenditures - Preferred Dividends Paid)

Note: Payout ratios are normally calculated as Dividends/Net Income. To get a more accurate picture of cashflow available to shareholders, the above formula can used instead.

Related Terms

Cash Flow, Payout Ratio

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