Benzinga | Dec 17, 2020 10:14AM EST

Evaluating The Safety Of Winnebago Industries's Dividend

Here's your daily dividend safety check. Today, we're evaluating Winnebago Industries (NYSE:WGO) to ensure its 0.78% dividend yield is safe or not, as the company is releasing its earnings on December 18, 2020 before the bell. We will assess this based on its earning to dividend payout ratio and history of dividend cuts.

Winnebago Industries'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. Winnebago Industries has a payout ratio of 8.28%, 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 Winnebago Industries 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, Winnebago Industries 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 Winnebago Industries's Dividend Overall?

Winnebago Industries 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 Winnebago Industries will cut its dividend next quarter.

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