What Is a Target Payout Ratio?

Expenditure rate

Expenditure rate

Right!

Expenditure rate

Refers to the percentage of total profit that the company pays to shareholders in the form of dividends. A fast-growing emerging company typically reinvests most of its earnings in the company's working capital, which usually does not pay dividends. Compared with other industrial companies, regulated utilities such as electricity, natural gas and telephone and telegraph have historically distributed a large portion of their stable income to shareholders in the form of dividends. They pay large dividends to attract investors who want high yields, and issue new securities to finance the funds needed for their business development.