Today is Wednesday, June 5, 2019, and this is your daily dividend safety update. Today we’re looking at Daktronics (NASDAQ: DAKT) stock to see whether its 4.58% dividend is safe.
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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)
Daktronics has an undefined payout ratio due to negative earnings, as payout ratio equals dividends per share divided by earnings per share. That’s not good. If the company has negative earnings, it probably can’t afford its dividend — and it might have to borrow money to pay it.
Cash Flow Growth Year-Over-Year
Daktronics 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
Daktronics has a recent history of dividend cuts. In fact, it most recently cut its dividend this year. That’s not a good sign. Companies that have recently cut their dividend are generally more likely to cut them again.
The Takeaway
Daktronics stock has failed 3 of our 3 dividend safety metrics. With that in mind, we believe a dividend cut is very 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.
