Benzinga | Jan 5, 2021 10:26AM EST

How Likely Is a Dividend Cut From RPM International?

In today's dividend safety check, Benzinga Insights looks into RPM International (NYSE:RPM) to see if its 1.67% 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.

RPM International's Payout Ratio

Payout ratio is an important measure of dividend affordability and is equal to dividends per share divided by earnings per share. RPM International's payout ratio of 26.39% is low enough to not cause concern. When a payout ratio is relatively low (i.e. below 75%), it suggests that a company can afford to cover its dividend. A ratio closer to 100% could indicate that a company is struggling to cover its dividend.

Has RPM International 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. RPM International 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 RPM International's Dividend Overall?

RPM International has failed one of our dividend safety tests. It has a low payout ratio but has two recent cases of dividend cuts. With all of this in mind, it is unlikely that RPM International will cut its dividend next quarter.

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