A dividend is a portion of a company’s earnings that is distributed to its shareholders.
For eg. If you buy 100 shares of ABC company and company declared Rs. 5 as dividend then you will receive 100*5 = Rs.500 as dividend.
Dividend payout Ratio is calculated by dividing amount of dividend paid on stock by net income of the company. For eg if company is paying a total of Rs. 20000 in dividend and net income is 50000 then dividend pay out ratio = 20000/50000 = 40.