Operating cash flow payout ratio
Cash produced by the business before any of it is spent on capital. It absorbs the working-capital swings that earnings do not.
What it measures
It sits between earnings and free cash flow, and is the right basis where capital spending is genuinely discretionary or negligible. For most companies it is neither, and the operating cash flow ratio will read comfortably lower than the free cash flow ratio for exactly the reason that should worry a reader: it has not yet paid for the business to keep existing.
The distribution
Across every company here whose filings support this basis, whether or not it is the one that applies to them.
| Companies | Lowest | 25th pct | Median | 75th pct | Highest |
|---|---|---|---|---|---|
| 501 | 0.3% | 14.7% | 26.0% | 45.4% | 392.9% |
Where it is the basis that applies
21 companies here are read on operating cash flow rather than on anything else, because that is what their own filings support. Among them the median payout is 20.2%, a quarter pay out less than 14.9% and a quarter more than 44.3%. They are concentrated in Financial services (4), Energy (3), Health care (3), Industrials (3), Communications (2).
Lowest payout
Highest payout
- Lennar (LEN) 240.3%
- Entravision Communications (EVC) 170.9%
- KKR (KKR) 136.0%
- Alexandria Real Estate Equities (ARE) 64.5%
- Western Midstream Partners (WES) 64.4%
- Alibaba Group Holding (BABA) 44.3%
- Equitable Holdings (EQH) 44.0%
- Phillips 66 (PSX) 38.7%
Common questions
What is a operating cash flow payout ratio?
Cash produced by the business before any of it is spent on capital. It absorbs the working-capital swings that earnings do not.
What is a good operating cash flow payout ratio?
Across the 501 companies here that report one, the median is 26.0%, with half between 14.7% and 45.4%. A figure is only meaningful against companies measured the same way and in the same sector, which is why the coverage rating is scored within a sector rather than against a fixed band.
How is it calculated here?
From the company's own annual filing, read out of SEC XBRL. Every company page names the accession number each figure came from and links it to EDGAR, so the arithmetic can be checked against the source rather than taken on trust.
The other four bases
The same dividend produces a different ratio on each of them, and the dividend payout ratio page sets out why.