Payout ratio

The payout ratio is the share of profit a company pays out as dividends to shareholders. Example: EPS = $5, dividend = $2 → payout ratio = 40%. Guidance: Values around 30–60% are often considered healthy and sustainable. Above 80% is risky — if earnings fall, the dividend must be cut quickly. Some sectors (e.g. REITs) structurally run high payouts.