On the 28 February 2018, First Real Estate Investment Trust (SGX:AW9U) will be paying shareholders an upcoming dividend amount of SGD0.02 per share. However, investors must have bought the company’s stock before 23 January 2018 in order to qualify for the payment. That means you have only 2 days left! Is this future income a persuasive enough catalyst for investors to think about First Real Estate Investment Trust as an investment today? Below, I’m going to look at the latest data and analyze the stock and its dividend property in further detail. View our latest analysis for First Real Estate Investment Trust
How I analyze a dividend stock
If you are a dividend investor, you should always assess these five key metrics:
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Is its annual yield among the top 25% of dividend-paying companies?
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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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Is it able to pay the current rate of dividends from its earnings?
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Will it be able to continue to payout at the current rate in the future?
How well does First Real Estate Investment Trust fit our criteria?
REITs are a special-case dividend payer. This is because a high percentage of their earnings are required to be paid out as dividends. First Real Estate Investment Trust has a payout ratio of 95.02%, meaning that dividend is predominantly funded by retained earnings. Going forward, analysts expect AW9U’s payout to increase to 106.97% of its earnings, which leads to a dividend yield of around 6.31%. However, EPS is forecasted to fall to SGD0.08 in the upcoming year. Therefore, although payout is expected to increase, the fall in earnings may not equate to higher dividend income. If there’s one type of stock you want to be reliable, it’s dividend stocks and their stable income-generating ability. AW9U has increased its DPS from SGD0.07 to SGD0.09 in the past 10 years. It has also been paying out dividend consistently during this time, as you’d expect for a company increasing its dividend levels. These are all positive signs of a great, reliable dividend stock. Compared to its peers, First Real Estate Investment Trust has a yield of 6.10%, which is high for reits stocks.
Next Steps:
With these dividend metrics in mind, I definitely rank First Real Estate Investment Trust as a strong income stock, and is worth further research for anyone who considers dividends an important part of their portfolio strategy. 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. I’ve put together three key aspects you should further examine: