Dividend payout ratio
The dividend payout ratio is the share of a company’s earnings (or free cash flow) it pays out as dividends — a gauge of how sustainable the dividend is.
The dividend payout ratio divides the dividends a company pays by its earnings (or, in a stricter version, by its free cash flow). A 40% payout ratio means the company distributes $0.40 of every $1 of profit and retains the rest. It is one of the best quick checks on whether a dividend is affordable.
A low payout ratio leaves room for the dividend to grow and to survive a bad year; a payout ratio above 100% means a company is paying out more than it earns, which usually cannot last without borrowing or dipping into reserves. Acceptable ratios differ by industry — REITs and utilities run high by design.
stocks-llm assesses dividend sustainability from real reported earnings, cash flow, and dividend data (SEC XBRL + Finnhub) with its as-of date, rather than from a streak alone. This is informational, not advice.
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Informational only — NOT financial advice. This is an educational definition, not a recommendation to buy or sell anything. Metrics on stocks-llm are delayed data and may be missing or stale. Always verify information independently and consult a qualified financial professional before making any investment decision.