Payout ratio

Payout ratio — dividends paid ÷ net earnings. The first number in the yield-trap discriminator: below ~70%, the dividend is covered by profits with a cushion for bad years; above 100%, the company is paying shareholders out of borrowings or its own flesh, and a cut is a matter of time. Computable for any PSE company from its EDGE disclosures (dividends per share ÷ earnings per share).

First used in: 2.1 · Dividends without the traps