The Value Chronicles Episode 7 – Dividend Pay-out Ratio

How to calculate a dividend pay-out ratio

Today is a relatively short post about the dividend payout ratio where I provide the formula and a brief interpretation. The DPR formula is,

In words, it the total dividends paid to stockholders, divided by the net income which is the same as earnings or profit of the company.

Application to Crypto

My interpretation of this ratio to crypto is amount of pre-mined coins still in developer hands. I ignore the income stream from transactions fees and look only at coins currently available in the market.

The dividends is what everyone has received while the net income is what they could have received, in shares a better term than DPR would be free float, but I am trying to make a shift using well known ratios.

To give an example, bitcoin has 16.6 million coins printed, with the genesis block pre-mined and untouched worth a million bitcoins. This would leave a DPR or free-float of 15.6 / 16.6 = 0.94

Almost everything has been given to miners with little future prospect of this treasure trove of coins being sold in future and impacting price.

A nice and easy episode to grace into the midweek. 😃

Till next time,
Tinus

** Images courtesy of Investopedia and LateX Equation Editor