How Likely Is Lennar To Cut Its Dividend?

This is your daily dividend safety check. Today, we consider Lennar as its earning call is on December 16, 2020 after the bell. Let's look at Lennar LEN to see if its 1.22% dividend yield is safe, judging by its earnings to dividend payout ratio and history of dividend cuts.

Lennar'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. Lennar has a payout ratio of 11.79%, 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 Lennar 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. In the last few years, Lennar 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 Lennar's Dividend Overall?

Lennar 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 Lennar will cut its dividend next quarter.

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