Have you been keeping an eye on RHT Health Trust’s (SGX:RF1U) upcoming dividend of SGD0.01 per share payable on the 14 June 2018? Then you only have 3 days left before the stock starts trading ex-dividend on the 04 June 2018. Is this future income stream a compelling catalyst for dividend investors to think about the stock as an investment today? Let’s take a look at RHT Health Trust’s most recent financial data to examine its dividend characteristics in more detail. Check out our latest analysis for RHT Health Trust

5 questions to ask before buying a dividend stock

When assessing a stock as a potential addition to my dividend Portfolio, I look at these five areas:

• Is their annual yield among the top 25% of dividend payers?

• Has it consistently paid a stable dividend without missing a payment or drastically cutting payout?

• Has dividend per share risen in the past couple of years?

• Does earnings amply cover its dividend payments?

• Will it be able to continue to payout at the current rate in the future?

Does RHT Health Trust pass our checks?

RHT Health Trust has a trailing twelve-month payout ratio of more than 200% of earnings, meaning that the dividend is predominantly funded by retained earnings. Going forward, analysts expect RF1U’s payout to fall to 133.67% of its earnings, which leads to a dividend yield of around 7.41%. Moreover, EPS should increase to SGD0.04, meaning that the lower payout ratio does not necessarily implicate a lower dividend payment. If there’s one type of stock you want to be reliable, it’s dividend stocks and their stable income-generating ability. Unfortunately, it is really too early to view RHT Health Trust 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. Compared to its peers, RHT Health Trust generates a yield of 2.89%, which is high for Healthcare stocks but still below the market’s top dividend payers.

Next Steps:

After digging a little deeper into RHT Health Trust’s yield, it’s easy to see why you should be cautious investing in the company just 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 further examine: