If you're looking to become intentional with your dividend investing, you'll want to do your best to avoid dividend traps. A dividend trap is a too-good-to-be-true dividend yield that's unsustainable. Don't just look at the dividend yieldAlthough it's the most common metric cited for dividends, dividend yields can be misleading. You can calculate the dividend payout ratio by dividing a company's yearly dividend by its earnings per share (EPS). There isn't a dividend payout ratio that's universally considered "good" because dividend best practices can vary widely between industries, but in general, you probably want a ratio between roughly 30% and 50%.

Source: The Guardian June 08, 2022 20:39 UTC