Dividend-hungry investors tend to look for the best yield they can find. It can be dangerous to get too greedy, as high yield – a big dividend relative to share price – often means taking on lots of risk. But experts say it’s wise to look at another gauge as well: dividend payout ratio, the percentage of earnings paid as dividends. The higher the figure, the greater the risk the company won’t be able to avoid a dividend cut if things go wrong. In extreme cases, firms pay out more than they earn, a red flag signaling the need for a deeper look to determine if it is a freak event or a sign of trouble like tumbling earnings…
