The company maintains a fairly
high payout ratio as it returns much of its cash flows to shareholders in the form of dividends.
Not exact matches
As in developed markets, if the yield is too
high, or if the
payout ratio doesn't leave room for reinvestment, there is a risk the dividend could get cut.
As earnings is calculated based on General Accepted Accounting Principles (GAAP), a company could show a
high payout ratio, but a lower cash
payout ratio.
While there is a risk BEP doesn't match my assumption due to the
high payout ratio, I still consider this number
as the company showed more commitment to increase its
payouts than keep its FFO
payout ratio in order.
IBM has the
highest payout ratio,
as a percentage of trailing -12-month free cash flow, among these six companies.
As commented above a
high payout ratio is not unexpected for a utility.
We observed this
as high profit margins (
high earnings / sales),
high return on equity (
high earnings / book value), and low dividend
payout ratios (dividends /
high earnings).
As such, dividend growth in the next few years certainly won't match that last few, but I'm very content with that given the exceedingly
high current yield, my
high confidence in Textainer to ride the storm through to better times, and ultra-safe P / E and reasonable
payout ratio.
As I mentioned above their
payout ratio is a bit
high and I wouldn't want it to go much
higher.
But some investors can be blinded by
high guaranteed returns and ignore the warning signs such
as unsustainable
payout ratios.
Also, despite the fact that Company A recorded the
highest earnings and also 80 % dividend
payout ratio, its Dividend per Shares is lower
as a result of its large number of outstanding shares.
You can invest in industries that typically have
high dividend
payout and yield
ratios, such
as banking and utilities, or use to find companies with
high dividend payment rates.
So, when investing, you not only want to invest in a company that has a
high dividend, but you want to see a low
payout ratio as well, since that means they are more likely to continue to be able to pay the nice dividend.
As commented above a
high payout ratio is not unexpected for a utility.
These are obviously more risky for investors
as the stocks will have abnormally
high dividend yields and
payout ratios over 100 % most of the time.
A dividend cut
as high as 10 % would be quite unusual at today's low
payout ratio.
Overall, we are looking for reasonable
payout ratios, and leverage metrics that are not too
high,
as well
as valuation metrics that are in - line with comparable companies.
As you can see here, T's
payout ratio, quarter - by - quarter, has usually been
high for the past 10 years.
They are covered calls on low
payout ratio stocks identified by Aaron Levitt
as good dividend candidates because of their relatively
high yields and low
ratios.
He believes the best dividend stocks for
high income possess characteristics such
as healthy
payout ratios, conservative balance sheets, reliable cash flows, recession - resistant products, and a track record of consistently rewarding shareholders with dividend increases.
The authors of Buffett's Alpha consider
high payout ratios a signal of
high quality
as well.
The
payout ratio is a bit
high though, but
as you said it's still manageable.
As earnings is calculated based on General Accepted Accounting Principles (GAAP), a company could show a
high payout ratio, but a lower cash
payout ratio.
As a state - regulated monopoly company selling non-discretionary services, it's no surprise to see Duke Energy's consistent results, which enable it to run its business with a
higher payout ratio.
Given the
payout ratio based on next year's earnings is just 20 % this dividend
payout could be frequently and significantly boosted
higher in coming years
as the clamps start to come off the banking sector over the medium term
as balance sheets continue to be in much better positions since the financial crisis.