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Strategies & Market Trends : Fundamental Value Investing
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To: Sergio H who wrote (1802)7/10/2012 7:48:29 AM
From: bruwin  Read Replies (1) of 4719
 
I guess a current dividend can appear "high" if the previous dividend was very low, or non-existent.

However, the 'Payout Ratio' (Dividend Paid to Shareholders/Net Income Earned by Company) is another kettle of fish.
Apart from making a Capital Gain from selling one's shares, a dividend is one of the few ways that a shareholder gets a return on his investment, so the higher the 'Payout Ratio' the better.

If Payout Ratios for S&P500 companies are currently low one can possibly assume that companies are retaining their earnings due to "uncertainties going forward".
Or maybe they are spending on Capital equipment etc.., to put themselves in a good position for when things pick up.
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