Weingarten Realty Investors (NYSE:WRI) stock is about to trade ex-dividend in 3 days time. If you purchase the stock on or after the 5th of September, you won't be eligible to receive this dividend, when it is paid on the 13th of September.
Weingarten Realty Investors's next dividend payment will be US$0.40 per share, and in the last 12 months, the company paid a total of US$1.58 per share. Looking at the last 12 months of distributions, Weingarten Realty Investors has a trailing yield of approximately 6.0% on its current stock price of $26.49. Dividends are an important source of income to many shareholders, but the health of the business is crucial to maintaining those dividends. So we need to investigate whether Weingarten Realty Investors can afford its dividend, and if the dividend could grow.
View our latest analysis for Weingarten Realty Investors
Dividends are typically paid out of company income, so if a company pays out more than it earned, its dividend is usually at a higher risk of being cut. Weingarten Realty Investors is paying out an acceptable 72% of its profit, a common payout level among most companies. That said, REITs are often required by law to distribute all of their earnings, and it's not unusual to see a REIT with a payout ratio around 100%. We wouldn't read too much into this. That said, even highly profitable companies sometimes might not generate enough cash to pay the dividend, which is why we should always check if the dividend is covered by cash flow. Dividends consumed 72% of the company's free cash flow last year, which is within a normal range for most dividend-paying organisations.
It's positive to see that Weingarten Realty Investors's dividend is covered by both profits and cash flow, since this is generally a sign that the dividend is sustainable, and a lower payout ratio usually suggests a greater margin of safety before the dividend gets cut.
Click here to see the company's payout ratio, plus analyst estimates of its future dividends.
Have Earnings And Dividends Been Growing?
Businesses with strong growth prospects usually make the best dividend payers, because it's easier to grow dividends when earnings per share are improving. Investors love dividends, so if earnings fall and the dividend is reduced, expect a stock to be sold off heavily at the same time. That's why it's comforting to see Weingarten Realty Investors's earnings have been skyrocketing, up 34% per annum for the past five years. The current payout ratio suggests a good balance between rewarding shareholders with dividends, and reinvesting in growth. Earnings per share have been growing quickly and in combination with some reinvestment and a middling payout ratio, the stock may have decent dividend prospects going forwards.