Ask a Fool: How Do You Know a Dividend Is Going to Die?

In the following video, Motley Fool financials analyst Matt Koppenheffer takes a question from a Fool reader, who writes, "I would like to know more about the payout ratio and how to realize a company is in danger of paying their dividend. I always hear that 75% is the high limit but I see many companies still able to make dividend payments with 200% payout ratio."

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Comments from our Foolish Readers

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  • Report this Comment On March 11, 2013, at 5:25 PM, 123spot wrote:

    Matt, watched this hoping to get an idea of whether the VZ dividend is considered safe. What do you think? Thanks. And thanks for the explanation about the issues in the general question. Spot

  • Report this Comment On March 11, 2013, at 11:43 PM, TMFKopp wrote:

    @123spot

    Up front: I'm not a VZ owner myself or an expert in VZ, but if you look at the company's cash flow statement, you can see that the cash it's bringing in (even after backing out capex) is far more than what it's paying out in dividends.

    Based on the VZ Wireless ownership stuff with Vodafone (among other things), there's more that needs to be understood to get the full picture, but as I noted in the video, the 600% payout ratio certainly isn't representative of its ability to keep paying.

    Matt

  • Report this Comment On March 12, 2013, at 3:20 PM, 123spot wrote:

    Matt, that helps me a lot. Thank you. Spot

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