What is the dividend payout ratio?
A dividend is a part of a company's profit paid to its shareholders.[S1] The dividend payout ratio is the share of a year's net income paid out this way, as a percentage.
Profit not paid out is kept in the business.[S8]
How is the payout ratio worked out?
Payout ratio = dividends ÷ net income × 100. Per share, it is dividends per share ÷ diluted earnings per share (EPS).
Verizon's and Pfizer's capital-returns notes say which of the two they use.
Verizon's page uses the per-share way.
It shows dividends declared of $2.74 a share (FY2025) and diluted EPS of $4.06 (FY2025). That gives a payout ratio of 67.4% (FY2025).
Pfizer's page divides cash dividends by net income instead: 125.7% (FY2025).
Where do you find it in a 10-K or 10-Q?
You can work it out from two places.
Dividends per share sit in the analysis of changes in stockholders' equity, a note or separate statement. SEC rules require any dividend per share and in total, for each class of shares.[S2] In a 10-Q, that analysis covers the year to date, with each quarter shown.[S3]
Net income and EPS sit near the bottom of the income statement.[S4] See EPS and diluted EPS.
What does the payout ratio leave out?
- Buybacks. Repurchases of common stock are a separate line from dividends in the cash flow statement.[S7]
- Cash. Net income includes non-cash items. The cash flow statement adjusts for them.[S8] See free cash flow.
- Timing. Dividends declared in a year can differ from dividends paid in it. Verizon's 10-K shows both.[S6]