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Dividends can be underrated but they form a large part of investment returns, playing an important role in compounding returns in the long run. Over the past 3 years, Garda Diversified Property Fund (ASX:GDF) has returned an average of 8.00% per year to shareholders in terms of dividend yield. Should it have a place in your portfolio? Let’s take a look at Garda Diversified Property Fund in more detail. View our latest analysis for Garda Diversified Property Fund

Here’s how I find good dividend stocks

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

• Does it pay an annual yield higher than 75% of dividend payers?

• Has its dividend been stable over the past (i.e. no missed payments or significant payout cuts)?

• Has it increased its dividend per share amount over the past?

• Can it afford to pay the current rate of dividends from its earnings?

• Will it be able to continue to payout at the current rate in the future?

How does Garda Diversified Property Fund fare?

Garda Diversified Property Fund has a trailing twelve-month payout ratio of 50.83%, which is rather low compared to other REITs. Generally, REITs are expected to pay out the majority of its earnings to provide a regular income stream for their investors. 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. Reliablity is an important factor for dividend stocks, particularly for income investors who want a strong track record of payment and a positive outlook for future payout. Unfortunately, it is really too early to view Garda Diversified Property Fund as a dividend investment. It has only been consistently paying dividends for 3 years, however, standard practice for reliable payers is to look for a 10-year minimum track record. Relative to peers, Garda Diversified Property Fund produces a yield of 8.21%, which is high for REITs stocks.

Next Steps:

Whilst there are few things you may like about Garda Diversified Property Fund from a dividend stock perspective, the truth is that overall it probably is not the best choice for a dividend investor. However, if you are not strictly just a dividend investor, the stock could still offer some interesting investment opportunities. Given that this is purely a dividend analysis, I urge potential investors to try and get a good understanding of the underlying business and its fundamentals before deciding on an investment. Below, I’ve compiled three fundamental factors you should look at: