The main objective of this study was to investigate factors that determine the dividend payout of private commercial banks in Ethiopia. A balanced panel dataset (covering 2010–2019) from the National Bank of Ethiopia and ten private commercial banks’ annual reports were used and analyzed through correlation and panel data regression techniques. Dividend payout was taken as a dependent variable, and the independent variables covered under this study were both bank-specific (profitability, liquidity, and last year’s dividend payout) and macroeconomic factors (inflation rate, real GDP growth rate, and foreign exchange rate). The results of the regression analysis showed that liquidity, profitability, last year’s dividend payout, and foreign exchange rate were the key determinants of the Ethiopian private banks’ dividend payout ratio. And the researcher suggests that private bank sectors must focus on the factors of dividend payout in bank specific determinants, and it is better for the banks to revise the mentioned factors annually as they might not be stable. This will support them to make their dividend payout decision well-organized and reasonable, which, in the long run, will aid them to achieve their objective (maximizing profit) and satisfy employees and shareholders' needs as well as have a strong dividend payout.