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Could Cognex Corporation (NASDAQ: CGNX) Cut its Dividend?

Written by Wealth Daily Research Team
Posted August 13, 2019

Today is Tuesday, August 13, 2019, and this is your daily dividend safety update. Today we’re looking at Cognex Corporation (NASDAQ: CGNX) stock to see whether its 0.44% dividend is safe.

Let’s look at the company’s payout ratio, cash flow growth, and dividend history to gauge the probability of a dividend cut in the next few years.

Payout Ratio (Dividends/Earnings)

Cognex Corporation has a payout ratio of 16.12%. That’s low enough for us! Payout ratio equals dividends per share divided by earnings per share. A low payout ratio indicates that the company has plenty of money to cover its dividend. We’d be more concerned if the ratio was closer to 100% (or over it).

Cash Flow Growth Year-Over-Year

Cognex Corporation has grown its cash flow by 483.55% in the last year. That’s a good omen for dividend investors! When a company grows its cash flow, it can use some of that extra cash to strengthen — or even raise — its dividend.

Dividend History & Recent Cuts

Cognex Corporation has not cut its dividend in the recent past. That’s a good sign. It’s not a guarantee that the company will never cut its dividend, but companies that have cut their dividends recently are generally more likely to cut them again.

The Takeaway

Cognex Corporation stock has failed 0 of our 3 dividend safety metrics. With that in mind, we believe a dividend cut is unlikely in the next few years.

Editor’s Note: We’ve been keeping an eye on some dividend stocks that could be better for your income portfolio than Cognex Corporation. These dividends are much bigger — and safer — than the paltry yields many investors settle for. Enter your email below to learn more.

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