A dividend that an entity decides to pay out to its equity holders. This refers to the total amount of dividends paid that consist of all categories of such payments: preferred dividends (dividends paid to holders of preferred stock) and ordinary dividends (dividends paid to holders of ordinary or common stock).

Dividend payout is taken out of an entity’s net income.

This dividend payout is usually assessed by comparing it to a company’s net earnings, where the resulting measure is called a dividend payout ratio (DPR) and is stated as a percentage. The dividend payout ratio is usually expressed as annual dividend paid per share divided by earnings per share (EPS).