Tag Archives: education

Dividend Payout Ratio: Is It Relevant?

I was just going over some of my sector-based watch lists and was struck by the wide variety of dividend payout ratio targets that have been set by companies. This got me thinking about how often investors, and specifically dividend investors, use payout ratio as an initial screening tool for finding potential investments.

Not only do payout ratios vary significantly from sector to sector, but they also can vary significantly between companies operating in similar businesses. For example, it is quite common for utility companies to pay out more than 50% of their earnings in dividends, as they operate in generally stable businesses that have predictable earnings. However, when looking at my 30 stock utility watch list, there is a range of targeted payout ratios from 40-75%, with UGI Corporation $UGI on the low end and Dominion Resources $D at the top.

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Education Center Added

Just giving a quick update that I have begun construction of an “Education Center” that will cover some of the basic questions of Dividend Growth Investing.

Thus far I have the topics “Portfolio Weighting“, “Dividend Reinvestment“, and “Yield Vs. Growth“.

I am also planning on adding “Stock Selection” and “Portfolio Construction” pages, but thought I’d also open it up to readers as well to see if they can think of other important topics that should be covered.

As of now I am just populating these different topics with articles that I have personally written, but as time goes on I also plan to add articles from other authors from Seeking Alpha and other sites as I come across them.

Do you have any MUST READ articles in your bookmarks that you think would be worthwhile to others? If so, please share in the comments below and I will consider them for addition.

Thanks, and Happy New Year!

Eric