Dividend payout ratios:
A) Usually do not vary from year to year, but remain constant
B) May be over 100 percent during times of economic expansion and high profits
C) May be over 100 percent during times of economic recession and low profits
D) Tend to be greater than 60 percent of profits.

Question

Quizplus · Accepted Answer

During economic recessions and low profits, companies may pay dividends that exceed their current earnings, resulting in a payout ratio over 100 percent, often to maintain investor confidence.

Dividend Payout Ratios