how is a dividend rate calculated 
the calculation of the dividend rate of an investment fund or portfolio involves multiplying the most recent periodic dividend payments by the number of payment periods in one year for example if a fund of investments pays a dividend of 50 cents quarterly and also pays an extra dividend of 12 cents per share because of a nonrecurring event from which the company benefited the dividend rate is 2 12 per year 50 cents x 4 quarters 12 cents 2 12 companies that generate substantial cash flows generally pay out dividends conversely businesses with rapid growth typically reinvest any cash generated back into the company and not to paying shareholder dividends cash intensive companies that produce essential consumer products such as food beverages and household items and those who provide health care for example usually spend less to grow their companies therefore these businesses are more likely to distribute a percentage of income to shareholders as dividends dividend payout ratiocompanies that pay dividends often prefer to maintain or slowly grow their dividend rates as a demonstration of stability and to reward shareholders businesses that cut dividends may be entering a financially weaker state that most times is accompanied by a corresponding drop in the stock price the dividend payout ratio is one way to assess the strength of a company s dividends the calculation for a payout ratio is to divide dividend by net income and then multiply the sum by 100 when the payout ratio is lower it is preferable as the company will be disbursing less of its net income to shareholder dividend payments further as the business is paying out less the firm and the payments are more sustainable conversely companies with high payout ratios may have difficulty maintaining dividend payments especially if an unforeseen event happens dividend aristocratsincome seeking investors often search for companies that demonstrate long histories of steadily growing dividend payments these companies dubbed dividend aristocrats by definition must exhibit at least 25 years of consistent and significant annual dividend increases dividend aristocrats typically orbit among sectors like consumer products and health care which tend to thrive in different economic climates kiplinger identified 65 high dividend stocks to watch out for in 2020 some of the names that made the list include medical image machine maker roper technologies paint maker sherwin williams and alcohol distributor brown forman 1some of the best investment apps include features or functions that enable users to identify which companies offer dividend payouts real world exampleretail giant walgreens boots alliance wba the largest retail pharmacy in both the united states and europe stands out as a top dividend aristocrat its pharmacy business performed well with 5 2 comparable sales growth and 5 9 comparable prescription growth given the company s history of outperformance analysts predict 8 10 annualized growth in earnings per share over the next several years furthermore returns will likely be boosted by walgreens s 3 93 dividend yield as well as a rising valuation 2 