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 -1.11%), Microsoft (MSFT +2.38%), and Waste Management (WM -0.60%), illustrating how the ratio deserves careful attention during analysis.

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About the Author

Daniel Sparks
Daniel Sparks is a contributing Motley Fool stock market analyst covering technology, industrials, financials, and consumer goods. Daniel is the owner and chief investment officer of Sparks Capital Management. He holds a master’s degree in business administration from Colorado State University. The Globe and Mail profiled him and his investing philosophy in an article titled, “This stock picker is outperforming nearly everybody else. Here’s how he is doing it.”
TMFDanielSparks
X@sparks_capital

Fool contributor Daniel Sparks has no position in any stocks mentioned. The Motley Fool recommends Apple and Waste Management. The Motley Fool owns shares of Apple, Microsoft, and Waste Management. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

Stocks Mentioned

Apple Stock Quote
Apple
NASDAQ: AAPL
$336.64
(-1.11%)-$3.78
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Microsoft Stock Quote
Microsoft
NASDAQ: MSFT
$535.07
(+2.38%)+$12.46
WM Stock Quote
WM
NYSE: WM
$208.83
(-0.60%)-$1.27

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

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