In This Article:
It looks like CapitaLand Retail China Trust (SGX:AU8U) is about to go ex-dividend in the next 2 days. You can purchase shares before the 8th of August in order to receive the dividend, which the company will pay on the 27th of September.
CapitaLand Retail China Trust's next dividend payment will be S$0.063 per share, on the back of last year when the company paid a total of S$0.10 to shareholders. Based on the last year's worth of payments, CapitaLand Retail China Trust stock has a trailing yield of around 6.6% on the current share price of SGD1.54. We love seeing companies pay a dividend, but it's also important to be sure that laying the golden eggs isn't going to kill our golden goose! As a result, readers should always check whether CapitaLand Retail China Trust has been able to grow its dividends, or if the dividend might be cut.
View our latest analysis for CapitaLand Retail China Trust
If a company pays out more in dividends than it earned, then the dividend might become unsustainable - hardly an ideal situation. Fortunately CapitaLand Retail China Trust's payout ratio is modest, at just 44% of profit. That said, REITs are often required by law to distribute all of their earnings, and it's not unusual to see a REIT with a payout ratio around 100%. We wouldn't read too much into this. Yet cash flows are even more important than profits for assessing a dividend, so we need to see if the company generated enough cash to pay its distribution. Thankfully its dividend payments took up just 44% of the free cash flow it generated, which is a comfortable payout ratio.
It's positive to see that CapitaLand Retail China Trust's dividend is covered by both profits and cash flow, since this is generally a sign that the dividend is sustainable, and a lower payout ratio usually suggests a greater margin of safety before the dividend gets cut.
Click here to see the company's payout ratio, plus analyst estimates of its future dividends.
Have Earnings And Dividends Been Growing?
Stocks with flat earnings can still be attractive dividend payers, but it is important to be more conservative with your approach and demand a greater margin for safety when it comes to dividend sustainability. Investors love dividends, so if earnings fall and the dividend is reduced, expect a stock to be sold off heavily at the same time. It's not encouraging to see that CapitaLand Retail China Trust's earnings are effectively flat over the past five years. Better than seeing them fall off a cliff, for sure, but the best dividend stocks grow their earnings meaningfully over the long run.