Question

In May of 2017, Apple accounted that it would increase its dividend to $13.22 billion annually...

In May of 2017, Apple accounted that it would increase its dividend to $13.22 billion annually which surpassed Exxon Mobil's $12.777 billion pay out. Apples 2017 net income was $48.35 billion and Exxon mobile was $19.7 billion. How do the dividend pay out ratios compare for the two companies?

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Answer #1

Dividend payout ratio = total dividend/total income

DPR For apple: = $13.22/$48.35 = 27.34%

DPR for exxon = $12.777/$19.7 = 64.86%

Dividend payout ratio indicates how much profit of a company is distributed by it to its shareholder. In the about case, at the first glance it may seem as apple is paying more dividend but actually it DPS is low than exxon which means apple is retaining more and distributing less while exxon exxon is distributing more and retaining less. Company retaing money from their income for future growth which is necessary. Hence investor should look at a comoany with stable DPS over a period..

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