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 +1.29%), Microsoft (MSFT +1.14%), and Waste Management (WM +1.11%), illustrating how the ratio deserves careful attention during analysis.
