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Is Heico's Dividend Safe?

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Welcome to your daily dividend safety check. Today, we'll be looking into Heico (NYSE:HEI) to see if its 0.14% dividend yield is safe as the company is releasing its earnings on December 21, 2020 after the bell. To better understand this, we'll be looking into its earnings to dividend payout ratio and history of dividend cuts.

Heico's Payout Ratio

A dividend's affordability can be measured by its payout ratio. It's equal to dividends per share divided by earnings per share. Heico has a payout ratio of 14.55%, 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 Heico Cut Its Dividend in the Recent Past?

In general, past behavior does not predict future behavior, but companies that have a recent history of dividend cuts are more likely to cut them again, as they have less of an incentive to appease income investors than companies with long histories of consistent or rising dividends. In the last few years, Heico has not cut its dividend. Although there is no guarantee of dividend safety, this does imply the company's management is reluctant to cut it.

How Safe Is Heico's Dividend Overall?

Heico 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 unlikely that Heico will cut its dividend next quarter.

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

 

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Posted-In: BZI-DGDividends

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