Total payout ratio

Dividends plus buybacks, as a share of profit returned to shareholders

In detail

The total payout ratio is total dividends plus share buybacks, divided by net income, as a percentage. The payout ratio counts dividends only, but companies also return money by buying back shares, so this ratio puts the two together. Buybacks can vary widely from year to year, so looking at several years side by side shows the pattern better than a single year.

Example

Dividends of $3 billion and buybacks of $2 billion against net income of $10 billion is a total payout ratio of 50%.

Related terms

Payout ratio Share buyback Dividend Net income

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