A company's dividend payout ratio gives investors an idea of how much money it returns to its shareholders compared to how much it keeps on hand to reinvest in growth, pay off debt, or add to cash reserves. This ratio is easily calculated using the figures found at the bottom of a company's income statement. It differs from the dividend yield, which compares the dividend payment to the company's current stock price.

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The dividend payout ratio for a company can be calculated by dividing the tota... View the full answer