Dividends play a key role in compounding returns over time and can form a large part of our portfolio return. Over the past 5 years, Centuria Industrial REIT (ASX:CIP) has returned an average of 9.00% per year to shareholders in terms of dividend yield. Does Centuria Industrial REIT tick all the boxes of a great dividend stock? Below, I’ll take you through my analysis. See our latest analysis for Centuria Industrial REIT
Here’s how I find good dividend stocks
When assessing a stock as a potential addition to my dividend Portfolio, I look at these five areas:
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Is it paying an annual yield above 75% of dividend payers?
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Has it consistently paid a stable dividend without missing a payment or drastically cutting payout?
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Has dividend per share risen in the past couple of years?
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Does earnings amply cover its dividend payments?
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Based on future earnings growth, will it be able to continue to payout dividend at the current rate?
Does Centuria Industrial REIT pass our checks?
REITs are a special-case dividend payer. This is because a high percentage of their earnings are required to be paid out as dividends. The company currently pays out 85.51% of its earnings as a dividend, according to its trailing twelve-month data, which is in-line with most other REIT stocks. In the near future, analysts are predicting a higher payout ratio of 95.36%, leading to a dividend yield of 8.02%. Moreover, EPS should increase to A$0.27. The higher payout forecasted, along with higher earnings, should lead to greater dividend income for investors moving forward. If there is one thing that you want to be reliable in your life, it’s dividend stocks and their constant income stream. Unfortunately, it is really too early to view Centuria Industrial REIT as a dividend investment. It has only been consistently paying dividends for 5 years, however, standard practice for reliable payers is to look for a 10-year minimum track record. In terms of its peers, Centuria Industrial REIT produces a yield of 8.30%, which is high for REITs stocks.
Next Steps:
Taking into account the dividend metrics, Centuria Industrial REIT ticks most of the boxes as a strong dividend investment, putting it in my list of top dividend payers. 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. There are three pertinent aspects you should further research:
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1. Future Outlook: What are well-informed industry analysts predicting for CIP’s future growth? Take a look at our free research report of analyst consensus for CIP’s outlook.
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2. Valuation: What is CIP 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 CIP is currently mispriced by the market.
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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.