Attention dividend hunters! STAG Industrial Inc (NYSE:STAG) will be distributing its dividend of $0.12 per share in 2 days time, on the 15 December 2017, and will start trading ex-dividend on the 29 November 2017. Is this future income stream a compelling catalyst for dividend investors to think about STAG as an investment today? Let’s take a look at STAG’s most recent financial data to examine its dividend characteristics in more detail. Check out our latest analysis for STAG Industrial
How I analyze a dividend stock
When assessing a stock as a potential addition to my dividend Portfolio, I look at these five areas:
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Is it the top 25% annual dividend yield payer?
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Does it consistently pay out dividends without missing a payment of significantly cutting payout?
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Has it increased its dividend per share amount over the past?
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Is is 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 STAG Industrial fit our criteria?
STAG Industrial has a payout ratio of more than 200% of earnings, meaning that the dividend is predominantly funded by retained earnings. Furthermore, analysts are forecasting the payout ratio to remain at this high level going forward, leading to a future of uncertainty around the stability of STAG’s dividend income. Reliablity is an important factor for dividend stocks, particularly for income investors who want a strong track record of payment and a positive outlook for future payout. The reality is that it is too early to consider STAG Industrial as a dividend investment. It has only been consistently paying dividends for 7 years, however, standard practice for reliable payers is to look for a 10-year minimum track record. Relative to peers, STAG generates a yield of 4.94%, which is high for equity real estate investment trusts (reits) stocks.
What this means for you:
Are you a shareholder? You may be wondering why STAG Industrial is paying out dividends at all, instead of re-investing into the business to generate higher cash flows in the future. It may be beneficial exploring other dividend stocks as alternatives to STAG or even look at high-growth stocks to supplement your steady income stocks. I encourage you to continue your research by checking out my interactive free list of dividend rockstars as well as high-growth stocks to potentially add to your holdings.
Are you a potential investor? Now you know to keep in mind the reason why investors should be careful investing in STAG for the dividend. On the other hand, if you are not strictly just a dividend investor, STAG could still be offering some interesting investment opportunities. I also recommend taking sufficient time to understand its core business and determine whether the company and its investment properties suit your overall goals. Check our latest free fundmental analysis to explore other aspects of STAG.
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.