How Likely Is Jabil To Cut Their Dividend?

Here's your daily dividend safety check. Today, we're evaluating Jabil JBL to ensure its 0.9% dividend yield is safe or not, as the company is releasing its earnings on December 17, 2020 before the bell. We will assess this based on its earning to dividend payout ratio and history of dividend cuts.

Jabil's Payout Ratio

Payout ratio is equal to dividends per share divided by earnings per share, and is used as an important measure of dividend affordability. Jabil has a payout ratio of 8.16%, which is low enough to not cause concern. A relatively low payout ratio like this (i.e. below than 75%) suggests that a company has plenty of money to cover its dividend. A ratio which is closer to (or greater than) 100% could indicate that a company is struggling to afford its dividend.

Has Jabil Cut Its Dividend in the Recent Past?

For the most part, it is difficult to predict future behavior based on past activities, but companies with a recent history of dividend cuts are more likely than others to cut them again. If a company does not have a history of consistent or rising dividends, they have less incentive to appease income investors than companies that do. Jabil has not cut its dividend in the last few years, implying its management is reluctant to do so. While there is no guarantee of dividend safety, this is indicative of reliable dividend actions.

How Safe Is Jabil's Dividend Overall?

Jabil 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 quite unlikely that Jabil will cut its dividend next quarter.

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