I am from India and new to share market. When I was doing some research to find which share to buy, I found one share(of Punjab National Bank) listed with 165% dividend percentage. The same percentage is given in multiple websites.

As far as I understood Dividend percentage is (dividend amount/price per share)*100. So div percent of 165% doesn't make any sense.

Please help me if I am missing out something. Here are the links

  • In your definition, the "dividend amount" is usually the historical value from the last actual dividend payment, but the "price per share" is the current share price. If something happens to the company that makes the share price collapse, this "historical dividend yield" can exceed 100%, but in that situation it would be foolish for an investor to expect the next dividend payment would be as big as to the last one. (Peter K's answer is correct - this is just a comment on the OP's phrase "165% doesn't make sense"). – alephzero Apr 21 '16 at 22:59

Do not confuse the DIV (%) value and the dividend yield.

As you can see from this page, the DIV (%) is, as you say, 165%. However, the dividend yield is 3.73% at the time of writing.

As the Investopedia page referenced above says:

The payout ratio is calculated as follows: Annual Dividends per Share / Earnings per Share.

which means that the dividends being paid out are more than the earnings of the company:

In extreme cases, dividend payout ratios exceed 100%, meaning more dividends were paid out than there were profits that year. Significantly high ratios are unsustainable.

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  • Pls check if I got that right: If I've 1000 in shares with a DIV of 5%, I'd get 50. Now if the company makes surplus and decides to pay a higher DIV this year, let's say 7.5% instead of 5%. I'd then receive 75 instead of 50, which would mean the DIV ratio is 150%? Or on the other site, if the company is struggling and reduces payout to 3% instead of 5%, the DIV ratio is 60%? – jawo Apr 22 '16 at 6:27
  • @Sempie DIV says nothing about how much you get. It just tells you how much the company pays out relative to how much it made. You would not get 50 from a DIV of 5% without several other numbers being right. – Peter K. Apr 22 '16 at 10:43
  • 1
    Calling the payout ratio "DIV (%)" sure is confusing. – Zenadix Apr 22 '16 at 18:50
  • @Zenadix : You're not wrong! :-) – Peter K. Apr 22 '16 at 18:55

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