An often overlooked metric to evaluate dividend paying stocks is the dividend payout ratio. How does it affect your dividends and share price performance?

If you compare Ascendas REIT versus Kingsmen Creatives, the dividend yield is 5.9% versus 5% its a no brainer which you would choose.

Assuming valuations, business model are largely similar, dividend payout ratio is one important consideration.

Dividend payout ratio is either dividend / earnings or dividend / free cash flow.

It tells you how much out of profits warned or cash flow received that the company can safely payout.

In the case of Ascendas REIT, like all Reits they are mandated to pay out greater than 90 percent of earnings, so their payout ratio is higher.

Kingsmen Creatives, on the other hand pays out 50% of earnings or free cash flow. This also means that if Kingsmen is not conservative they can choose ...