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1 Ratio Every Dividend Investor Must Know

By Daniel Sparks - Apr 23, 2013 at 10:45AM

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If you are an investor looking for income, you'll need to understand this ratio.

The payout ratio is an excellent tool for dividend investors. Without it, it's tough to judge how sustainable a company's dividend is. Though a lower payout ratio is always better than a high payout ratio, some companies can easily cope with higher ratios than others. In the video below, Fool contributor Daniel Sparks looks at Apple (AAPL -1.92%), Microsoft (MSFT -0.40%), and Waste Management (WM 0.97%), illustrating how the ratio deserves careful attention during analysis.

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Stocks Mentioned

Apple Inc. Stock Quote
Apple Inc.
AAPL
$140.36 (-1.92%) $-2.75
Microsoft Corporation Stock Quote
Microsoft Corporation
MSFT
$259.62 (-0.40%) $-1.03
Waste Management, Inc. Stock Quote
Waste Management, Inc.
WM
$157.60 (0.97%) $1.52

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

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