Dividend Payout Ratio Essentials - PowerPoint PPT Presentation

View by Category
About This Presentation
Title:

Dividend Payout Ratio Essentials

Description:

When you’re sizing up dividend stocks, getting your arms around the dividend payout ratio is essential. Here’s how. – PowerPoint PPT presentation

Number of Views:24

less

Write a Comment
User Comments (0)
Transcript and Presenter's Notes

Title: Dividend Payout Ratio Essentials


1
Dividend Stocks Research
Dividend Payout Ratio Essentials
2
Welcome to Dividend Stocks Research Your premier
site for Rankings and Reviews of the best
dividends stocks around. For more info on
dividend stocks please visit our website
DividendStocksResearch.com
3
  • Get Your Free Report On What You MUST Do to Never
    Run Out of MONEY in Retirement!
  • Well tell you about this
  • Special Offer
  • at the end of the video!

4
  • Hi, My name is Aaron and Im with Dividend Stocks
    Research, today were reviewing our recently
    published article

5
  • Dividend Payout Ratio Essentials

6
  • Things are rarely as simple as they seem, and
    rarely as simple as wed like them to be...
    Especially when it comes to investing in the best
    dividend stocks. You know what we should do?

7
  • All of us who follow the market should start off
    the day with a stiff drink of humility. We should
    remember that every morning when the bell rings
    on the trading floor, were about to be treated to

8
  • billions of dollars worth of irrational behavior.
    Dividend investors are going to make decisions
    based on geo-political events, earnings reports,
    their own opinions, opinions from other people,
    and hunches.

9
  • And you know what? The market is not, and has
    never been, a sensible and rational place. But
    the good news is that virtually lost in all the
    bizarre behavior is a beautiful number.

10
  • One gorgeous and simple number we can look at
    that will help us make a sensible decision when
    it comes to investing in the best dividend stocks.

11
  • This number is easy to find, easy to understand,
    and can help you dodge some ugly dividend yield
    disasters.
  • This number is the Dividend Payout Ratio.

12
  • The Beauty Of Dividend Payout Ratio

13
  • The Dividend Payout Ratio is a needle of clarity
    in the stock markets haystack of confusion. Not
    long ago, my associate Michael Jennings revealed
    some of his dividend payout ratio secrets.

14
  • Why is this such a helpful number? And what makes
    the Dividend Payout Ratio so important? In a
    world of hype and opinion, its a truth-teller.

15
  • It reveals more about the company to dividend
    investors than virtually any other single number.
    It speaks volumes. Here is how to use Dividend
    Payout Ratio to make money and how to stay out of
    trouble.

16
  • Dividend Payout Ratio Essential 1

17
  • The Dividend Payout Ratio shows you how much of
    the money a company makes goes to pay the
    dividend.Thats all it does.

18
  • Its a quick way to see if a company is living
    beyond its means when it comes to rewarding
    stockholders. You can see if the company is too
    stingy, too generous, or about right.

19
  • Dividend Payout Ratio Essential 2

20
  • The Dividend Payout Ratio shouldnt go too much
    higher than 60. When a company plows more than
    60 of its net profits into dividends, one of two
    things is happening..

21
  • It has plenty of money and could use this money
    better doing something else, or it
  • has soft earnings. With soft earnings, too big a
    chunk of the quarters revenues earnings can be
    gobbled up to keep the dividend the same.

22
  • Dividend Payout Ratio Essential 3

23
  • When the Dividend Payout Ratio does go up over
    60, find out why. Now and then, its OK, and
    nothing more than a sign of an earnings slump.

24
  • Were witnessing this right now with the big
    global energy companies. Their earnings are down,
    but they have plenty of money lying around to
    keep paying the dividend.

25
  • Dividend Payout Ratio Essential 4

26
  • Use the number to compare two dividend stocks
    youre looking at. Heres an example. Chevron
    CVX and Exxon Mobil XOM are in the same boat,
    each stung by the plunge in crude oil prices.

27
  • Neither company is pulling in great revenue right
    now. (Relatively speaking.) Sure, Exxon Mobil is
    a lot bigger than Chevron.

28
  • But its interesting to see how the two stack up
    when it comes to taking care of dividend
    investors with dividend yield. Chevron pays a
    4.82 yield. The Dividend Payout Ratio is 127.8

29
  • Exxon Mobil pays a 3.68 yield. The Dividend
    Payout Ratio is 78.2
  • You see whats happening? Chevron is dipping into
    its savings to pay the dividend, and Exxon Mobil
    isnt.

30
  • A 100 dividend payout ratio is when all the
    quarterly earnings go to pay the dividend. To
    keep its dividend the same, and avoid a dividend
    cut, Chevron needs more money than it pulls in
    from earnings. Thats why the ratio is 127.8.

31
  • At first blush, you might want to invest in
    Chevron...you get more income from the higher
    yield. But the lower yield you get with Exxon
    Mobil comes with a few interesting upsides.

32
  • The company isnt tapping into money it could use
    to make an acquisition, and in the energy
    business these days, there are plenty of outfits
    Exxon Mobil might want to buy. The war chest is
    in good shape.

33
  • The lower dividend payout ratio also means Exxon
    Mobil isnt stretching itself thin like Chevron.
    If crude oil prices take an even longer time to
    rebound, Exxon Mobil has the cash to ride things
    out.

34
  • How has Exxon Mobil been doing? Check out this
    chart for a fascinating 10-year view...

35
(No Transcript)
36
  • You know whats interesting? Exxon Mobil hasnt
    cut its dividend in ages. The dividend has been
    growing for 32 years. And look at the hits the
    stock has taken in the past 10 years.

37
  • Just a year ago Exxon Mobil stock was at 97.
    Today, its trading close to 80, clawing back
    from the downturn triggered by the collapse in
    crude oil prices.

38
  • When Exxon Mobil revenues snap back, if the
    dividend payment says the same, the dividend
    payout ratio will drop. If revenues dont just
    snap back, but roar back and explode, its not
    unreasonable to expect another dividend increase.

39
  • Not a bad thing.
  • Seeing where income from the highest paying
    dividend stocks could be heading comes into a bit
    better focus when you watch the dividend payout
    ratio.

40
  • Its a nice, simple way to size up a dividend
    stock.
  • And as Albert Einstein reminded us, "Everything
    should be made as simple as possible, but not
    simpler."

41
  • Want More from Dividend Stocks Research?
  • Follow us on Social Media

42
  • Want more FREE information on dividend stocks?
  • DividendStocksResearch.com

DOWNLOAD NOW!
43
READ THIS FREE REPORT!
What You MUST Do to Never Run Out of MONEY in
Retirement!
About PowerShow.com