Benzinga | Dec 16, 2020 10:22AM EST

How Likely Is General Mills To Cut Their Dividend?

Here's your daily dividend safety check. Today, we're evaluating General Mills (NYSE:GIS) to ensure its 3.34% dividend yield is safe or not, as the company is releasing its earnings on December 17, 2020 before the bell. We will assess this based on its earning to dividend payout ratio and history of dividend cuts.

General Mills's Payout Ratio

Payout ratio is equal to dividends per share divided by earnings per share, and is used as an important measure of dividend affordability. Investors should not be too concerned about General Mills's relatively low payout ratio of 51.0%. When a payout ratio is low like this (i.e. below than 75%), it indicates a company has the money needed to cover its dividend. A ratio closer to 100% could suggest that a company is struggling to pay its dividend.

Has General Mills Cut Its Dividend in the Recent Past?

For the most part, it is difficult to predict future behavior based on past activities, but companies with a recent history of dividend cuts are more likely than others to cut them again. If a company does not have a history of consistent or rising dividends, they have less incentive to appease income investors than companies that do. In the last few years, General Mills 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 General Mills's Dividend Overall?

General Mills 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 General Mills will cut its dividend next quarter.

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