While you can accept the logic of the argument this

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Unformatted text preview: an for whether dividends are sustainable. Returning to the list, it is quite clear that using the cutoff of 67% for the payout ratio would prune the portfolio down to about 15 firms. Even using a liberal cutoff point of 80% for the dividend payout ratio prunes the portfolio down to only 21 companies, which are listed in Table 2.4 below: Table 2.4: Firms with high dividend yields and payout ratios below 80% Company MicroFinancial Inc Telesp Celular Annual Dividends per Share $0.20 $0.15 Trailing 12-month EPS $1.26 $0.90 Payout Ratio 15.87% 16.67% 33 Dynegy Inc. 'A' AES Corp. El Paso Corp. Mission West Properties Koger Equity Inc. R.J. Reynolds Tobacco TECO Energy Advanced Tobacco Apex Mortgage Capital Permian Basin Rty Tr Williams Coal Sm Gs Public Serv. Enterprise Allegheny Energy CMS Energy Corp. MFA Mortgage Aquila Inc. UIL Holdings NorthWestern Corp. Redwood Trust Inc $0.30 $0.25 $0.87 $0.96 $1.40 $3.80 $1.42 $0.05 $2.00 $0.56 $0.88 $2.16 $1.72 $0.72 $1.12 $0.70 $2.88 $1.27 $2.52 $1.46 $1.17 $2.93 $...
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