Is Accenture's Dividend Safe?

This is your daily dividend safety check. Today, we consider Accenture as its earning call is on December 17, 2020 before the bell. Let's look at Accenture ACN to see if its 1.53% dividend yield is safe, judging by its earnings to dividend payout ratio and history of dividend cuts.

Accenture's Payout Ratio

Payout ratio is an important measure of dividend affordability. It's equal to dividends per share divided by earnings per share. Accenture's payout ratio of 51.76% is low enough to not cause concern. When a payout ratio is relatively low (i.e. below 75%), it suggests that a company can afford to cover its dividend. A ratio closer to 100% could indicate a company is struggling to cover its dividend.

Has Accenture Cut Its Dividend in the Recent Past?

Generally, past behavior is not highly predictive of what's to come. However, companies that have a recent history of dividend cuts are more likely to cut them again due to less incentive to appease income investors than companies with historically consistent or rising dividends. Accenture has not cut its dividend in the last few years. While this is no guarantee of dividend safety, it does imply that the company's management is reluctant to cut it.

How Safe Is Accenture's Dividend Overall?

Accenture has failed neither of our dividend safety tests. It has a low payout ratio and no recent case of dividend cut. With all of this in mind, it is very unlikely that Accenture will cut its dividend next quarter.

Looking for more help identifying reliable investments? Check out Benzinga's Breakout Opportunity Letter.