Attention dividend hunters! Reef Casino Trust (ASX:RCT) will be distributing its dividend of A$0.16 per share on the 14 March 2018, and will start trading ex-dividend in 3 days time on the 28 December 2017. Is this future income stream a compelling catalyst for dividend investors to think about the stock as an investment today? Let’s take a look at Reef Casino Trust’s most recent financial data to examine its dividend characteristics in more detail. View our latest analysis for Reef Casino Trust
5 checks you should use to assess a dividend stock
If you are a dividend investor, you should always assess these five key metrics:
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Is its annual yield among the top 25% of dividend-paying companies?
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Has its dividend been stable over the past (i.e. no missed payments or significant payout cuts)?
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Has dividend per share risen in the past couple of years?
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Is its earnings sufficient to payout dividend at the current rate?
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Based on future earnings growth, will it be able to continue to payout dividend at the current rate?
How does Reef Casino Trust fare?
The company currently pays out 161.99% of its earnings as a dividend, which means that the dividend is not well-covered by its earnings. Furthermore, analysts have not forecasted a dividends per share for the future, which makes it hard to determine the yield shareholders should expect, and whether the current payout is sustainable, moving forward. If there is one thing that you want to be reliable in your life, it’s dividend stocks and their constant income stream. Not only have dividend payouts from Reef Casino Trust fallen over the past 10 years, it has also been highly volatile during this time, with drops of over 25% in some years. These characteristics do not bode well for income investors seeking reliable stream of dividends. In terms of its peers, Reef Casino Trust produces a yield of 6.82%, which is high for hospitality stocks.
What this means for you:
Are you a shareholder? Investors may not have the best feeling about their investment in Reef Casino Trust right now, in terms of its dividend attributes. It may be valuable exploring other dividend stocks as alternatives to Reef Casino Trust or even look at high-growth stocks to complement your steady income stocks. I recommend continuing your research by exploring my interactive free list of dividend rockstars as well as high-growth stocks to potentially add to your holdings.
Are you a potential investor? Now you know to keep in mind the reason why investors should be careful investing in Reef Casino Trust for the dividend. On the other hand, if you are not strictly just a dividend investor, the stock could still be offering some interesting investment opportunities. As with all investments, you should always research extensively before deciding whether or not a stock is an appropriate investment for you. I always recommend analysing the company’s fundamentals and underlying business before making an investment decision. Dig deeper in our latest free fundmental analysis to explore other aspects of Reef Casino Trust.
To help readers see pass the short term volatility of the financial market, we aim to bring you a long-term focused research analysis purely driven by fundamental data. Note that our analysis does not factor in the latest price sensitive company announcements.
The author is an independent contributor and at the time of publication had no position in the stocks mentioned.