P/E Ratio Correlation to Payout Ratio

[EricL]

Watching payout ratios is good in a general sense, but different companies in different industries can have different ratios with varying levels of safety. For instance a utility, consumer staple or REIT can comfortably carry a 60-80% payout ratio while a materials, energy, tech, or discretionary company will have a tougher time keeping that high of a ratio.

Each company needs to be looked at individually based on historical numbers, consistency of earnings, debt loads, cyclicality, etc.

I don't think a single formula can be generated to give useful results because of this.