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Archive for the 'Dividends' Category

Feb 15 2009

The Dividend Payout Ratio

Published by Andy Hough under Dividends, Passive income Edit This

The series on how to make extra money with dividend stocks was getting rather unwieldy with eleven posts in the series already and a lot of subject area left to cover.  I have decided that rather than making one giant series, I will just post on different subjects and anyone wanting to learn about dividends can just sift through the dividend category for what they want to know.

Today we are going to look at how to use the dividend payout ratio when determining what stocks to buy.  Generally you want a stock to have a dividend payout ratio of less than 50% to ensure that the corporation has plenty of cash to continue paying the dividend.  This does vary by industry though.  If you have an REIT stock they are required by law to pay out at least 90% of their earning in dividends and often pay out over 100%.  Keep the industry standard in mind when looking at the dividend payout ratio.

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