A company expects to have net income of $6,000,000 during the next year. Its target capital structure is 40% debt and 60% equity. The company has determined that the optimal capital budget for the coming year is $5,000,000. If Davis follows a residual distribution policy (with all distributions in the form of dividends) to determine the coming years dividend, then what is Davis's dividend payout ratio?

50.0%

33.3%

26.7%

16.0%