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How Likely Is a Dividend Cut From Greenbrier Companies?

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In today's dividend safety check, Benzinga Insights looks into Greenbrier Companies (NYSE:GBX) to see if its 3.27% dividend yield is safe as the company is releasing its earnings on January 6, 2021 before the bell. To better understand this, we will be looking into the earnings-to-dividend payout ratio and whether the company's dividend has recently been cut.

Greenbrier Companies's Payout Ratio

A dividend's affordability can be measured by its payout ratio, which is equal to dividends per share divided by earnings per share. Greenbrier Companies's relatively high payout ratio of 168.75% may be an area of concern for investors. Typically, a high payout ratio near (or above) 100% is an indication that a company's earnings are unable to cover its dividend and that it may need to borrow money or cut the dividend to stay solvent.

Has Greenbrier Companies Cut Its Dividend in the Recent Past?

In general, past behavior does not predict future behavior, but companies that have recent histories of dividend cuts are more likely to cut them again. These companies have less of an incentive to appease income investors than companies with long histories of consistent or rising dividends. Greenbrier Companies recently cut its dividend in 2021. This indicates the company's management may be willing to do so again in the future to solve budgetary issues.

How Safe Is Greenbrier Companies's Dividend Overall?

Greenbrier Companies has failed two of our dividend safety tests. It has a high payout ratio but has three recent cases of dividend cuts. With all of this in mind, it is unlikely that Greenbrier Companies 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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