tag:blogger.com,1999:blog-4886595570005494885.post2509192941488472257..comments2009-03-01T09:14:15.964-05:00Nurseb911http://www.blogger.com/profile/04974722323117696369noreply@blogger.comBlogger2125tag:blogger.com,1999:blog-4886595570005494885.post-58054261887923051732009-03-01T09:14:00.000-05:002009-03-01T09:14:00.000-05:00Thanks for the feedback Richard,<BR/><BR/>The payout ratio is the percentage of earnings paid out as the dividend: [Dividend/EPS]*100<BR/><BR/>For income trusts high payouts are reflective of their business model. They payout the majority of their cashflow each month to unit holders. Many trusts can sustain their distributions above a 90% payout ratio because they are distributing cash instead of earnings. Carefully examine the cashflow statement of the company (YLO.UN) to determine if the trust has a enough monthly cashflow to cover expenses and the distribution. For a public corporation distributing a dividend 85% is likely not sustainable.<BR/><BR/>Best of luck on your blog. The Rule of 72 is a great concept I've written about on my site before and the wonder of compound interest is something many investors overlook as long-term investors.Nurseb911http://www.nurseb911.com/noreply@blogger.comtag:blogger.com,1999:blog-4886595570005494885.post-9695258656079060592009-03-01T08:58:00.000-05:002009-03-01T08:58:00.000-05:00Great article! Some sites don't seem to list the payout ratio. Correct me if I'm wrong, but you can calulate this as:<BR/><BR/>Payout Ratio = (Annual Dividend Per Share / Earns Per Share)*100<BR/><BR/>I was considering buying shares in Yellow Pages YLO.UN due to the high yield (20-25%). With a payout ratio of 85%, I suspect the dividend will eventually get slashed.<BR/><BR/>Thanks for the useful atricle,<BR/>Richard.<BR/>http://72rule.blogspot.comRichard F.http://www.blogger.com/profile/12417659341888956890noreply@blogger.com