Dividend Payout Ratio
Calculate the Dividend payout ratio, a financial metric that measures the proportion of earnings paid out as dividends to shareholders.
The payout ratio is a financial metric that helps investors assess the portion of a company’s earnings that is being distributed to shareholders in the form of dividends. It’s a valuable indicator for dividend investors as it indicates the sustainability of dividend payments and the company’s approach to distributing profits.
The formula is as follows:
\[\text{Dividend Payout Ratio} = \text{Dividends Paid} / \text{Net Income}\]The payout ratio shows how much room a company has to keep or raise its dividend. A ratio above 1 means the dividend is paid partly from reserves or borrowing, which cannot last unless profits were depressed by one-off charges. Because it uses net income, it is often checked against free cash flow, and for real estate investment trusts, whose net income is reduced by depreciation, it is not a useful measure.
Also known as: payout ratio.
Dividend Payout Ratio in Python or via the MCP
Install the Finance Toolkit with:
pip install financetoolkit -U
Then call get_dividend_payout_ratio as shown below.
from financetoolkit import Toolkit
toolkit = Toolkit(
["JNJ", "MCD", "TXN"],
api_key="FINANCIAL_MODELING_PREP_KEY",
start_date="2021-01-01",
end_date="2025-12-31",
)
toolkit.ratios.get_dividend_payout_ratio()
Or, after setting up the Finance Toolkit MCP, ask:
What share of their net income did Johnson & Johnson, McDonald's and Texas Instruments pay out as dividends from 2021 to 2025?
Which returns:
| 2021 | 2022 | 2023 | 2024 | 2025 | |
|---|---|---|---|---|---|
| JNJ | 0.5284 | 0.6511 | 0.3348 | 0.8405 | 0.4619 |
| MCD | 0.5194 | 0.6747 | 0.5352 | 0.5922 | 0.5973 |
| TXN | 0.5023 | 0.4933 | 0.7036 | 1.0042 | 1.0052 |
Parameters
get_dividend_payout_ratio accepts the following parameters.
| Parameter | Type | Description | Example |
|---|---|---|---|
rounding | int | None | The number of decimals to round the results to. Defaults to None, which uses the rounding of the Toolkit (4 unless set otherwise). | 2 |
growth | bool | Whether to calculate the growth of the ratios. Defaults to False. | True |
lag | int | list[int] | The lag to use for the growth calculation. Defaults to 1. | 4 |
compound | bool | Whether the growth is the compound annual growth rate over the lag (e.g. lag=5 for the five-year CAGR) instead of the total change. Defaults to False. | False |
standardize | bool | Whether to standardize (Z-Score) the result. When combined with growth=True, standardizes the growth values instead of the raw values. Defaults to False. | True |
trailing | int | The number of periods to sum flows (income and cash flow statement items) over, with balance sheet items averaged over the same number of period ends. E.g. 4 with quarterly data gives the trailing twelve months (TTM) and 3 with annual data a three-year cumulative figure. Defaults to None, which uses single-period flows (per quarter and not annualized with quarterly data). | 4 |