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Shurgard Self Storage S.A. (EBR:SHUR) is about to trade ex-dividend in the next 1 days. This means that investors who purchase shares on or after the 1st of October will not receive the dividend, which will be paid on the 3rd of October.
Shurgard Self Storage's upcoming dividend is €0.3 a share, following on from the last 12 months, when the company distributed a total of €0.5 per share to shareholders. Looking at the last 12 months of distributions, Shurgard Self Storage has a trailing yield of approximately 1.5% on its current stock price of €29.35. If you buy this business for its dividend, you should have an idea of whether Shurgard Self Storage's dividend is reliable and sustainable. We need to see whether the dividend is covered by earnings and if it's growing.
See our latest analysis for Shurgard Self Storage
Dividends are typically paid out of company income, so if a company pays out more than it earned, its dividend is usually at a higher risk of being cut. Shurgard Self Storage paid out a comfortable 33% of its profit last year. A useful secondary check can be to evaluate whether Shurgard Self Storage generated enough free cash flow to afford its dividend. Over the last year, it paid out dividends equivalent to 246% of what it generated in free cash flow, a disturbingly high percentage. Our definition of free cash flow excludes cash generated from asset sales, so since Shurgard Self Storage is paying out such a high percentage of its cash flow, it might be worth seeing if it sold assets or had similar events that might have led to such a high dividend payment.
While Shurgard Self Storage's dividends were covered by the company's reported profits, cash is somewhat more important, so it's not great to see that the company didn't generate enough cash to pay its dividend. Were this to happen repeatedly, this would be a risk to Shurgard Self Storage's ability to maintain its dividend.
Click here to see the company's payout ratio, plus analyst estimates of its future dividends.
Have Earnings And Dividends Been Growing?
Companies that aren't growing their earnings can still be valuable, but it is even more important to assess the sustainability of the dividend if it looks like the company will struggle to grow. If earnings decline and the company is forced to cut its dividend, investors could watch the value of their investment go up in smoke. That explains why we're not overly excited about Shurgard Self Storage's flat earnings 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.