Dividends play an important role in compounding returns in the long run and end up forming a sizeable part of investment returns. In the past 10 years Ascendas India Trust (SGX:CY6U) has returned an average of 7.00% per year to investors in the form of dividend payouts. Should it have a place in your portfolio? Let’s take a look at Ascendas India Trust in more detail. See our latest analysis for Ascendas India Trust

5 checks you should do on a dividend stock

Whenever I am looking at a potential dividend stock investment, I always check these five metrics:

• Is it the top 25% annual dividend yield payer?

• Has it consistently paid a stable dividend without missing a payment or drastically cutting payout?

• Has dividend per share risen in the past couple of years?

• Is its earnings sufficient to payout dividend at the current rate?

• Will the company be able to keep paying dividend based on the future earnings growth?

How well does Ascendas India Trust fit our criteria?

Ascendas India Trust has a trailing twelve-month payout ratio of 39.42%, which means that the dividend is covered by earnings. Going forward, analysts expect CY6U’s payout to increase to 98.57% of its earnings, which leads to a dividend yield of 6.68%. However, EPS is forecasted to fall to SGD0.07 in the upcoming year. Therefore, although payout is expected to increase, the fall in earnings may not equate to higher dividend income. This also brings about uncertainty around the sustainability of the payout ratio. If there is one thing that you want to be reliable in your life, it’s dividend stocks and their constant income stream. Whilst its per-share payments have increased during the past 10 years, there has been some hiccups. Investors have seen reductions in the dividend per share in the past, although, it has picked up again. Relative to peers, Ascendas India Trust generates a yield of 5.66%, which is high for Real Estate stocks.

Next Steps:

With this in mind, I definitely rank Ascendas India Trust as a strong dividend stock, and makes it worth further research for anyone who likes steady income generation from their portfolio. Given that this is purely a dividend analysis, 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. I’ve put together three pertinent factors you should further examine:

1. Future Outlook: What are well-informed industry analysts predicting for CY6U’s future growth? Take a look at our free research report of analyst consensus for CY6U’s outlook.

2. Valuation: What is CY6U worth today? Even if the stock is a cash cow, it’s not worth an infinite price. The intrinsic value infographic in our free research report helps visualize whether CY6U is currently mispriced by the market.

3. Other Dividend Rockstars: Are there better dividend payers with stronger fundamentals out there? Check out our free list of these great stocks here.

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.