What is the Dividend Payout Ratio & How Do You Calculate It?

In a recent article, Lanny broke down what a dividend is and highlighted what is so great about receiving a dividend.   When I first started learning about dividend investing, there were a lot of articles and emphasis on assessing a company’s dividend payout ratio.  So I thought I would take some time today, provide a definition for the payout ratio, show how to calculate the metric, and some other details/tricks of the trade that we have picked up over the years as we continue to invest in dividend growth stocks.

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