ruly Dividend yield and payout ratio calculator
The yield compares the dividend with the share price, the payout ratio compares it with earnings or free cash flow. Enter the annual dividend and at least one of the other three figures, per share.
The formula
Yield = dividend / share price. Payout ratio = dividend / earnings per share. Payout ratio on cash flow = dividend / free cash flow per share.
How to read the result
A payout ratio above 100% means the company pays out more than it earned that year: the dividend then draws on cash or debt. The payout ratio on free cash flow is often more telling, because accounting earnings can differ from the cash actually received.
Limits of the calculation
A high yield sometimes comes from a share price that has fallen sharply, ahead of a dividend cut. Compare the payout ratio over several years rather than a single one, and check that the dividend you enter does not include a one-off payment.
Glossary entries
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