Dividend Payout Ratio

Returns the dividend payout ratio, which measures the percentage of net income paid to shareholders as dividends. This is a key metric for evaluating dividend sustainability.

Calculation

Payout Ratio = Dividends Per Share / Earnings Per Share

Interpretation

Ratio Interpretation
< 0.30 Low payout, room to grow dividend
0.30-0.50 Moderate, healthy range
0.50-0.75 Higher payout, less cushion
> 0.75 High payout, dividend may be at risk
> 1.00 Paying more than earnings (unsustainable)

Supported Symbol Formats

Type Format Example
US Stocks SYMBOL AAPL, JNJ, T
ETFs SYMBOL N/A (usually)
REITs SYMBOL Special rules apply

Notes

  • REITs have higher payout ratios by design (required to distribute 90% of income)
  • Very high ratios (>100%) may indicate using reserves or debt to pay dividends
  • Returns as decimal; multiply by 100 for percentage

Examples

=DividendPayoutRatio("AAPL")
Apple payout ratio (~15%)
=DividendPayoutRatio("JNJ")
J&J payout ratio (~45%)
=DividendPayoutRatio("T")
AT&T payout ratio (varies)
=DividendPayoutRatio("O")
Realty Income (REIT, high ratio)
=DividendPayoutRatio(A1)
Symbol from cell reference
=DividendPayoutRatio("MSFT")*100
Convert to percentage

When to Use

  • Evaluating dividend sustainability
  • Screening for quality dividend stocks
  • Assessing dividend growth potential
  • Risk analysis of dividend cuts

When NOT to Use

Scenario Use Instead
Need dividend yield DividendYield()
Need dividend amount DividendRate()
Need earnings data EPS() or hf_EPS()
Analyzing REITs Consider AFFO payout ratio

Common Issues & FAQ

Q: Why is the payout ratio over 100%? A: The company is paying more in dividends than it earns. This is unsustainable long-term and may indicate a future dividend cut. However, this can happen temporarily during earnings dips.

Q: Why is the result a small decimal like 0.30? A: The ratio is expressed as a decimal. Multiply by 100 to get percentage: =DividendPayoutRatio("AAPL")*100

Q: How do I evaluate REIT payout ratios? A: REITs must pay 90% of taxable income as dividends. Use AFFO (Adjusted Funds From Operations) payout ratio for REITs instead of earnings-based ratio.

Get Access to 1 Billion Usable Market data points IN YOUR EXCEL SHEETS WITH EASY TO USE EXCEL FUNCTIONS

Get started today
MarketXLS Excel Add-in Tutorial - How to Use Dividend Payout Ratio and Other Financial Formulas
▶
How does MarketXLS work?

Related Functions