Dividend Payout Ratio
The Dividend Payout Ratio (DPR) is a financial metric that shows the proportion of a company's earnings paid out to shareholders in the form of dividends. It is calculated using the following formulas: - DPR = Dividend / Net Income. - DPR = Dividend per share / Earnings Per Share (EPS). A higher dividend payout ratio typically indicates that the company is distributing a larger portion of its profits to shareholders. This is often seen in well-established companies with stable earnings, as they are able to afford to pay higher dividends. It can also signal a company's confidence in its future earnings, though some investors may prefer companies that reinvest profits for growth rather than paying high dividends.
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