The Importance of a Payout Ratio

If a company is paying out all of their earnings to the shareholders, that's great in the short term. But it becomes unsustainable if things happen to the business and they don't have enough money to fix something or make an acquisition. And so, we don't want that. To kind of use Apple again, their payout ratio right now is 26. Their dividend yield is lower. They're only paying a dividend for a short period of time, so they don't has a long history of that.