6 Banks That Raised Dividends While Reducing Payout Ratios

The dividend payout ratio is often an important factor when considering dividend-paying investments. The ratio measures the size of a dividend payment compared to the company's net income. A higher dividend payout ratio leaves a lower percentage of total income within the company. This means that while the owners are receiving income, the company’s ability to grow may be hampered by a lack of income to reinvest. Moreover, where the payout is too high, it may indicate that the dividend is too high and in danger of being reduced. Lower dividend payout ratios are often found in companies that prefer to reinvest their income into the business. This reinvestment if sensibly performed in order to produce growth will hopefully, eventually increase income. That increased income could then cause the company to appreciate in value and/or increase its dividends. Those companies that have decreased their dividend payout ratios while still raising... Read more