Payout ratio (shares)

The distribution ratio or dividend distribution ratio for shares indicates what proportion of the annual surplus stock corporations pay out to shareholders in the form of dividend payments. In fundamental analysis, the payout ratio is an important factor in assessing a company's dividend policy. The payout ratio can be used to assess whether the dividend paid is in a healthy relationship to the profit generated.

For most companies in the DAX , the payout ratio is between 30 and 50 percent.

calculation

Frequently used formula

The payout ratio for corporations ( English dividend payout ratio ) is the ratio of dividend per share to earnings per share and is expressed as a percentage:

${\displaystyle {\text{Ausschüttungsquote}}={\frac {\text{Dividende je Aktie}}{\text{Gewinn je Aktie}}}\times 100\,\%}$

The application of this formula can lead to incorrect results if, for example, the values ​​for dividends per share and earnings per share are not determined on the same reference date. If the value for earnings per share comes from the company's annual report, its calculation is based on the weighted average number of shares outstanding during the reporting year . In contrast, only the number of shares in circulation on the dividend cut-off date, usually the day of the annual general meeting , is decisive for the profit distribution and thus also for the distribution ratio . Errors must therefore arise if capital measures lead to a change in the number of shares in circulation in the period between the preparation of the annual report and the general meeting.

Formula for exact calculation

In order to exclude possible inaccuracies in the calculation, the total dividend should be divided by the annual surplus to calculate the dividend rate, the result is given in percent:

${\displaystyle {\text{Ausschüttungsquote}}={\frac {\text{Dividendensumme}}{\text{Jahresüberschuss}}}\times 100\,\%}$

See also

• Price notation , interim dividend , dividend disadvantage , Natural dividend , dividend policy , dividend continuity

Individual evidence

1. ↑ What role does a company's payout ratio play? In: manager-magazin.de. Retrieved January 28, 2019 . 
2. ↑ Dividend Study 2019: Top marks and skid marks. Institute for Strategic Finance , DSW and dividendenadel.de, April 10, 2019, accessed on October 6, 2019 . 
3. ↑ What is the payout ratio? In: wallstreet-online.de. Retrieved January 28, 2019 . 
4. ↑ ▷ Earnings per share - simple definition & explanation »Lexicon. Retrieved February 16, 2019 . 
5. ↑ Shares in circulation. Retrieved February 16, 2019 . 
6. ↑ Which key dates are important for dividends? | IB Knowledge Base. Retrieved February 16, 2019 . 
7. ↑ boerse.ARD.de: Everything about share buybacks | Stock exchange knowledge for advanced users. Retrieved February 18, 2019 . 
8. ↑ Share buyback: Manipulating profits by buying back own shares . ISSN  0174-4909 ( faz.net [accessed February 18, 2019]).
9. ↑ Dividend: profit distribution of an AG | Lexicon - World of Business Administration. Retrieved February 16, 2019 .