How to Calculate the Dividend Payout Ratio for the Three Companies

by Mark Kennan

The dividend payout ratio measures the percentage of a company's earnings it pays out to shareholders in the form of dividends. If you want to calculate the dividend payout ratio for just one company, you may divide the company's dividends per share by the company's earnings per share. If you want to calculate the dividend payout ratio of multiple companies, you must calculate the total dividends paid and the total earnings per share. For example, if you invest in three companies, you might want to calculate the overall dividend payout ratio for your portfolio.

Add the dividends paid per share for each of the three companies to find the total dividends paid. For example, if company A pay $1.33, company B pays $4.23 and company C pays $3.88, the total dividends paid is $9.44.

Add the earnings paid per share for each of the three companies to find the total earnings. For example, if company A earns $2.33, company B earns $4.93 and company C earns $5.18, the total dividends equal $12.44.

Divide the total dividends by the total earnings to find the dividend payout ratio across the three companies. Completing this example, divide $9.44 by $12.44 to find the dividend payout ratio equals 0.7588, or about 75.88 percent.

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