what does the payout ratio tell you 
the payout ratio is a key financial metric used to determine the sustainability of a company s dividend payment program it s the amount of dividends paid to shareholders relative to the total net income of a company the higher the payout ratio the more its sustainability is generally in question especially if it s over 100 a low payout ratio can signal that a company is reinvesting the bulk of its earnings into expanding operations companies with the best long term records of dividend payments have historically had stable payout ratios over many years 