Fortune Brands Innovations (NYSE:FBIN) Has Announced That Its Dividend Will Be Reduced To $0.23

Fortune Brands Innovations, Inc.'s (NYSE:FBIN) dividend is being reduced from last year's payment covering the same period to $0.23 on the 13th of December. Despite the cut, the dividend yield of 1.8% will still be comparable to other companies in the industry.

View our latest analysis for Fortune Brands Innovations

Fortune Brands Innovations Doesn't Earn Enough To Cover Its Payments

We aren't too impressed by dividend yields unless they can be sustained over time. Before making this announcement, Fortune Brands Innovations was easily earning enough to cover the dividend. This means that most of its earnings are being retained to grow the business.

Earnings per share is forecast to rise by 46.3% over the next year. If the dividend continues on its recent course, the company could be paying out several times what it earns in the next 12 months, which could start applying pressure to the balance sheet.

Fortune Brands Innovations Has A Solid Track Record

The company has been paying a dividend for a long time, and it has been quite stable which gives us confidence in the future dividend potential. The dividend has gone from an annual total of $0.40 in 2013 to the most recent total annual payment of $1.12. This means that it has been growing its distributions at 11% per annum over that time. We can see that payments have shown some very nice upward momentum without faltering, which provides some reassurance that future payments will also be reliable.

Fortune Brands Innovations May Find It Hard To Grow The Dividend

The company's investors will be pleased to have been receiving dividend income for some time. Earnings have grown at around 3.2% a year for the past five years, which isn't massive but still better than seeing them shrink. While growth may be thin on the ground, Fortune Brands Innovations could always pay out a higher proportion of earnings to increase shareholder returns.

Fortune Brands Innovations Looks Like A Great Dividend Stock

It is generally not great to see the dividend being cut, but we don't think this should happen much if at all in the future given that Fortune Brands Innovations has the makings of a solid income stock moving forward. Reducing the amount it is paying as a dividend can protect the company's balance sheet, keeping the dividend sustainable for longer. Taking this all into consideration, this looks like it could be a good dividend opportunity.

Companies possessing a stable dividend policy will likely enjoy greater investor interest than those suffering from a more inconsistent approach. Meanwhile, despite the importance of dividend payments, they are not the only factors our readers should know when assessing a company. For instance, we've picked out 1 warning sign for Fortune Brands Innovations that investors should take into consideration. Is Fortune Brands Innovations not quite the opportunity you were looking for? Why not check out our selection of top dividend stocks.

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