The dividend payout ratio is the proportion of profits paid out as dividends to shareholders, usually expressed as a percentage.
Some companies pay shareholders all their profits, and some - only part of their profits.
If a company pays out part of its profits in the form of dividends, the rest remains with the business - a retention ratio is calculated to measure the level of retained earnings.
When interpreting the dividend payout ratio, there are several considerations to take into account, the most important of which is the level of maturity of the company.