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Can Nordson Maintain Its Dividend Yield?

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Benzinga Insights
·2 min read
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Welcome to your daily dividend safety check. Today, we'll be looking into Nordson (NASDAQ:NDSN) to see if its 0.78% dividend yield is safe as the company is releasing its earnings on December 15, 2020 after the bell. To better understand this, we'll be looking into its earnings to dividend payout ratio and history of dividend cuts.

Nordson'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. Investors should not be too concerned about Nordson's relatively low payout ratio of 27.46%. 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 Nordson Cut Its Dividend in the Recent Past?

Generally, past behavior is not highly predictive of what's to come. However, companies that have a recent history of dividend cuts are more likely to cut them again due to less incentive to appease income investors than companies with historically consistent or rising dividends. Nordson has not cut its dividend in the last few years. While this is no guarantee of dividend safety, it does imply that the company's management is reluctant to cut it.

How Safe Is Nordson's Dividend Overall?

Nordson has passed both 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 unlikely that Nordson will cut its dividend next quarter.

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

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