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Regal Real Estate Investment Trust (HKG:1881) is about to trade ex-dividend in the next 3 days. This means that investors who purchase shares on or after the 6th of September will not receive the dividend, which will be paid on the 26th of September.
Regal Real Estate Investment Trust's upcoming dividend is HK$0.068 a share, following on from the last 12 months, when the company distributed a total of HK$0.15 per share to shareholders. Last year's total dividend payments show that Regal Real Estate Investment Trust has a trailing yield of 8.2% on the current share price of HK$1.84. We love seeing companies pay a dividend, but it's also important to be sure that laying the golden eggs isn't going to kill our golden goose! As a result, readers should always check whether Regal Real Estate Investment Trust has been able to grow its dividends, or if the dividend might be cut.
Check out our latest analysis for Regal Real Estate Investment Trust
Dividends are usually paid out of company profits, so if a company pays out more than it earned then its dividend is usually at greater risk of being cut. Its dividend payout ratio is 94% of profit, which means the company is paying out a majority of its earnings. The relatively limited profit reinvestment could slow the rate of future earnings growth We'd be concerned if earnings began to decline. While Regal Real Estate Investment Trust seems to be paying out a very high percentage of its income, REITs have different dividend payment behaviour and so, while we don't think this is great, we also don't think it is unusual. Yet cash flows are even more important than profits for assessing a dividend, so we need to see if the company generated enough cash to pay its distribution. Over the last year, it paid out more than three-quarters (94%) of its free cash flow generated, which is fairly high and may be starting to limit reinvestment in the business.
It's encouraging to see that the dividend is covered by both profit and cash flow. This generally suggests the dividend is sustainable, as long as earnings don't drop precipitously.
Click here to see the company's payout ratio, plus analyst estimates of its future dividends.
Have Earnings And Dividends Been Growing?
Companies with consistently growing earnings per share generally make the best dividend stocks, as they usually find it easier to grow dividends per share. If earnings fall far enough, the company could be forced to cut its dividend. It's encouraging to see Regal Real Estate Investment Trust has grown its earnings rapidly, up 23% a year for the past five years. Earnings per share are growing at a rapid rate, yet the company is paying out more than three-quarters of its earnings.