MARKETS / GLOSSARY / SHARE OF PROFIT RETURNED

Share of profit returned

Share of profit returned is how much of the year's net income went back to shareholders as dividends and buybacks combined — the payout ratio with the buybacks put back in.

Definition

How it is computed here

Formula(dividends paid + net buybacks) ÷ net income
UnitRatio (shown as %)
PeriodOne fiscal year, as reported
SourceExtracted from SEC filings; every value on an asset page carries the accounting tag and the filing it came from
Identifierretorno_ao_acionista_sobre_lucro
The inputs

What goes into the formula

Dividends paid + net buybacksTotal cash returned, as in shareholder return.
Net incomeThe year's bottom line. When it is negative the ratio has no reading, and this site says the amount returned instead of printing a percentage of a loss.

A formula without its inputs explained is decoration. Where an input is missing from a filing, the metric is left empty here rather than completed with a zero or an estimate.

Worked example

How to calculate share of profit returned, step by step

Three companies returning cash from the same profit.

All three — net income$5,000M
A — dividends + buybacks$1,200M + $0
B — dividends + buybacks$1,200M + $3,400M
C — dividends + buybacks$1,200M + $5,300M
  1. A: 1,200 ÷ 5,000 = 24%.
  2. B: 4,600 ÷ 5,000 = 92%.
  3. C: 6,500 ÷ 5,000 = 130%.

Result: 24%, 92% and 130% from an identical profit

A is reinvesting three quarters of what it earns. C returned more than it earned, which it could only do out of cash built up earlier or by borrowing — neither is a scandal, both are worth knowing.

The figures in this example are illustrative and rounded — they are not a real company. The real figures on this site are the live ones below and on every asset page, each carrying the filing it came from.

Why it matters

What share of profit returned is good for

The payout ratio on its own is misleading for American companies, because it ignores the channel most of them actually use. This is the same question asked properly: of everything the company earned, how much left, and how much stayed to grow the business.

The limit

What this number does not tell you

The denominator is accounting profit, so everything that distorts net income distorts this — a single impairment can push the ratio above 100% in a year when nothing about the payout changed. Above 100% is not automatically unsustainable and not automatically sustainable either; the honest follow-up is the same ratio against free cash flow, which this site also computes.

Every metric on this site is published with its blind spot stated. A figure without its limit is half a fact.

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In the data

Highest reported share of profit returned

From the most recent fiscal year of each company.

On a real company

See it in a published filing

Their sectors

These pages show the figure across up to nineteen fiscal years, with the accounting tag and the filing behind every value.

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