Dividends play a key role in compounding returns over time and can form a large part of our portfolio return. Zug Estates Holding AG (VTX:ZUGN) has recently paid dividends to shareholders, and currently yields 1.5%. Let’s dig deeper into whether Zug Estates Holding should have a place in your portfolio.
Check out our latest analysis for Zug Estates Holding
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?
-
Does it consistently pay out dividends without missing a payment of significantly cutting payout?
-
Has it increased its dividend per share amount over the past?
-
Can it afford to pay the current rate of dividends from its earnings?
-
Based on future earnings growth, will it be able to continue to payout dividend at the current rate?
How well does Zug Estates Holding fit our criteria?
The company currently pays out 40% of its earnings as a dividend, according to its trailing twelve-month data, meaning the dividend is sufficiently covered by earnings. In the near future, analysts are predicting a higher payout ratio of 62%, leading to a dividend yield of 1.8%. Furthermore, EPS should increase to CHF72.98. The higher payout forecasted, along with higher earnings, should lead to greater dividend income for investors moving forward.
When thinking about whether a dividend is sustainable, another factor to consider is the cash flow. Companies with strong cash flow can sustain a higher payout ratio, while companies with weaker cash flow generally cannot.
If there is one thing that you want to be reliable in your life, it’s dividend stocks and their constant income stream. The reality is that it is too early to consider Zug Estates Holding as a dividend investment. It has only been consistently paying dividends for 4 years, however, standard practice for reliable payers is to look for a 10-year minimum track record.
Compared to its peers, Zug Estates Holding produces a yield of 1.5%, which is on the low-side for Real Estate stocks.
Next Steps:
Now you know to keep in mind the reason why investors should be careful investing in Zug Estates Holding 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. Given that this is purely a dividend analysis, I recommend taking sufficient time to understand its core business and determine whether the company and its investment properties suit your overall goals. Below, I’ve compiled three relevant aspects you should look at: