# How dividend payout

I wanted to know, how the company pay dividends to it’s shareholders

Company ABC made a net-profit of 2000. If their dividend payout ratio is 1%. How much is payed to its dividends and where the rest of the money will go.

Check this out,

Payout is percentage of eps and not face value.

So when company says they give 1 percent as dividend is it not on the face value of the share to arrive at the inr

Company never uses the term payout.
What you mentioned is absolutely right. The dividend is quoted as a percentage of face value. But when the term ‘dividend payout’ is used, it is understood to be a percentage of EPS.
Like ITC pays out 70 percent in the form of dividend. That means 70 percent of eps.
SBI declares 500 percent dividend to shareholders. That means it’s 500 percent of face value.

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Ok got it.

Some companies have dividend payout policy. I guess Vedanta has one. Of their earnings, some percentage of dividend has to be paid. Later the same is converted as a percentage of face value.
(Your favourite company after all )

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So, when it is dividend payout, it is from EPS.
When it is dividend declared, it is from face value.
Am I correct ?

It is ultimately from reserves only. It’s just a way to express.

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FY 2023
Net-profit - 189.07 crore
EPS - 5.89 rupees
Payout ratio - 0.43, which is 43%

Using the below formula:

DPS = EPS * Payout ratio
DPS = 5.89 * 0.43

DPS = 2.533 rupees/share in FY2023

However, according to financial data available in TicketTape, RAILTEL has provided two dividends in FY2023

Jan 20, 2022 - ₹1.75/share interim dividend
Sep 22, 2022 - ₹0.65/share final dividend

Total dividend of 2.4 rupees/share in FY2023.

Therefore, total dividend payed as per DPS formula and actual total dividend payed as per the financial report is not exactly the same.
Can anyone clarify my doubt ?