Fortune Brands Innovations (NYSE:FBIN) has announced plans to reduce its dividend from last year's payment to $0.23 on December 13th, a move that comes in the face of a history of stable dividends and an industry standard yield of 2.0%. The decision is part of the company's growth strategy, as it channels earnings towards expansion with a projected earnings increase of 44.7% anticipated within the next year.
The company's annual dividend has seen a significant rise from $0.40 in 2013 to $1.12 recently, marking an annual dividend growth rate of approximately 11%. However, the company's slow earnings growth rate of 3.2% per annum over the past five years has raised questions about the sustainability of further dividend growth.
The reduction in dividends is seen as a strategy to mitigate the risk of a high payout ratio that could put pressure on the balance sheet. Despite this year's cut, FBIN continues to be viewed as an attractive dividend investment option. The move is expected to ease balance sheet strain and ensure consistency in future dividend payments.
While the focus is often on dividends, investors are encouraged to consider other factors when evaluating FBIN. This includes the company's overall financial health and growth prospects, which remain positive despite the dividend cut.
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