Evaluating The Safety Of Herman Miller's Dividend

Here's your daily dividend safety check. Today, we're evaluating Herman Miller MLHR to ensure its 3.01% dividend yield is safe or not, as the company is releasing its earnings on December 16, 2020 after the bell. We will assess this based on its earning to dividend payout ratio and and whether its dividend has recently cut.

Herman Miller's Payout Ratio

Payout ratio is an important measure of dividend affordability. It's equal to dividends per share divided by earnings per share. Herman Miller has a payout ratio of 15.32%, which is low enough to not cause concern. A relatively low payout ratio like this (i.e. below than 75%) suggests that a company has plenty of money to cover its dividend. A ratio which is closer to (or greater than) 100% could indicate that a company is struggling to afford its dividend.

Has Herman Miller Cut Its Dividend in the Recent Past?

In general, past behavior does not predict future behavior, but companies that have a recent history of dividend cuts are more likely to cut them again, as they have less of an incentive to appease income investors than companies with long histories of consistent or rising dividends. Herman Miller recently cut its dividend in 2020. This indicates the company's management is willing to do so to solve budgetary issues, and may do so again the future.

How Safe Is Herman Miller's Dividend Overall?

Herman Miller has failed one of our dividend safety tests. It has a low payout ratio but has one recent case of dividend cut. With all of this in mind, it is not very likely that Herman Miller will cut its dividend next quarter.

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