Business and Personal Finance Dictionary

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• PAYOUT RATIO
  
  A payout ratio is the percentage of a company's net earnings that is distributed to its shareholders as dividends. Normally the range is 25% to 50% of those earnings, though companies may pay a higher percentage to keep their dividends at a certain level. That's because reducing the dividend may cause the stock price to fall if investors believe that the company's future earnings are in doubt. Some types of companies that generally pay higher dividends than others are sometimes described as income stocks.
  
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