When dividend payout ratios are higher than ________, investors should investigate whether or not they are sustainable.
A)15%
B)25%.
C)40%.
D)75%.

Question

Quizplus · Accepted Answer

Typically, dividend payout ratios higher than 75% can be a red flag for investors. This is because companies that are paying out such a high percentage of their earnings as dividends may not be reinvesting enough money back into the company to support future growth, which could eventually lead to a decline in stock value. Therefore, investors should investigate whether or not such high payout ratios are sustainable before making investment decisions.

When Dividend Payout Ratios Are Higher Than ________, Investors Should