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 -0.87%), Microsoft (MSFT -2.26%), and Waste Management (WM -0.23%), illustrating how the ratio deserves careful attention during analysis.
