How Likely Is Saratoga Investment To Cut Their Dividend?

In today's dividend safety check, Benzinga Insights looks into Saratoga Investment SAR to see if its 9.3% dividend yield is safe as the company is releasing its earnings on January 6, 2021 after 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.

Saratoga Investment'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. Saratoga Investment has a relatively high payout ratio of 83.67%. When a company's payout ratio is near (or above) 100%, that company's earnings are probably insufficient to cover its dividend, and the company may need to borrow money or cut the dividend to stay solvent.

Has Saratoga Investment Cut Its Dividend in the Recent Past?

Generally, past behavior is not highly predictive of the future. However, companies that have recent histories of dividend cuts have less incentive to appease income investors than companies with historically consistent or rising dividends. Saratoga Investment 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 Saratoga Investment's Dividend Overall?

Saratoga Investment 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 not very likely that Saratoga Investment will cut its dividend next quarter.

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