Payout ratio
The share of profit or cash flow directed to dividends.
Formula
\text{Payout} = \frac{\text{Dividends}}{\text{Net income}}How to read the number
Shows how well a payout is covered by results and whether it has any margin of safety.
When the metric lies
A payout ratio above one means paying out of reserves or out of debt — occasionally sensible, more often a warning.
Where it is used
The metric is calculated across every security in the catalogue and appears on the instrument card, in the multiples table and in the screener.
Also known as: payout ratio, dividend cover