Today is Monday, June 24, 2019, and this is your daily dividend safety update. Today we’re looking at Agilent (NYSE: A) stock to see whether its 0.86% dividend is safe.
Editor’s Note: We’ve been keeping an eye on some dividend stocks that could be better for your income portfolio than Agilent. These dividends are much bigger — and safer — than the paltry yields many investors settle for. Enter your email below to learn more.
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)
Agilent has a payout ratio of 17.82%. 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
Agilent has not grown its cash flow in the last year. That’s a bad omen for dividend investors. No cash flow means no dividend, so if cash flow isn’t growing, that’s a problem for us.
Dividend History & Recent Cuts
Agilent has a recent history of dividend cuts. In fact, it’s only been 4 years since the last cut. That’s not a good sign. Companies that have recently cut their dividend are generally more likely to cut them again.
The Takeaway
Agilent stock has failed 2 of our 3 dividend safety metrics. With that in mind, we believe a dividend cut is likely in the next few years.
Are you worried about the safety of your dividend stocks? Is there a particular stock you want us to grade next? Leave the ticker symbol in the comment section below.
