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SmartMoney
Published May 31, 2005  |  A A A
Investing

Fundamental Data: Payout Ratio

WHEN YOU'RE searching for stocks with high dividend yields, one quick check you should always make is to look at the company's payout ratio. It tells you what percentage of earnings management is doling out to shareholders in the form of dividends. If the number is above 75%, consider it a red flag — it might mean the company is failing to reinvest enough of its profits in the business. A high payout ratio often means the company's earnings are faltering or that it is trying to entice investors who find little else to get excited about.
Source: Bloomberg, Reuters
Data as of December 30, 2005
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