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- The dividend payout ratio is different to dividend yield in that it looks to see how well earnings support the dividend payment.
- There are many companies that issue a high yielding dividend, but then the problem becomes the dividend staying at the same level despite growth in earnings and cash.
- The thing with IBM is that despite year on year deterioration of EPS and FCF, IBM increased its dividend to 1.09$ and increased its dividend payout ratio to 19.78%. Also, the dividend has grown for 15 years and that’s quite an accomplishment in itself.