Dividend stocks can be very popular when economic growth as -- but. Big apps can also -- big tests just. Companies in the S&P 500 last year -- paid out a record 200. Eighteen billion dollars in dividends and when he fifteen could be even higher just look at companies like apple recently announced a big -- and but before you snap of the biggest dividend you can find here are some things to watch out. Want to investigate payout ratio. That is the percentage of earnings that companies pay out in dividends this quarter. The average pay a different S&P 500 company is about 43%. But some companies that recent rise into the 60s70s. Even 100%. Some company. Even have -- -- has over 100%. And that something and Obama and -- capitol I'd feel all of a red flag mixed with an airport. You look at multiyear trend. Payout ratio of over 100%. Could be due to -- one time -- just look at telecommunications. Company. These -- antitrust related to cough associated with hurricane sandy. Big dividend payouts -- high but it doesn't necessarily mean anything about the strength of the underlying company three. Consider this after some factors have higher payout ratios some of those include telecommunications companies and utility companies. Even financial services company. Other companies such as information technology companies for lower payout ratios but again that doesn't indicate anything about the strength of the company. Finally aware of the regular dividend -- sometimes companies have a -- that popped up their dividends that consent investors cleaned the house. And the value of the investment we'll go to. The bottom line look for a modest dividends -- -- -- written about.
Big dividends can mask big risks - Money Clip (1:58)
High-dividend stocks can lure investors into risky businesses. Here are four things to look for before you buy. (May 3, 2013) ( Transcript )