A payout rate is the annual percentage of an asset’s value distributed as dividends or interest. In an after-tax projection, it identifies income that receives its own tax treatment rather than remaining entirely as capital appreciation. section 8.1
Stock and bond inputs
A stock can use an 8% average return and a 0% payout rate. A bond can use a 3% average return with a 3% payout rate, treating its return as interest taxed at the ordinary-income rate. section 8.1
