Shares of Dexus (ASX:DXS) will begin trading ex-dividend in 3 days. To qualify for the dividend check of A$0.24 per share, investors must have owned the shares prior to 28 December 2017, which is the last day the company’s management will finalize their list of shareholders to which they will send dividend payments. What does this mean for current shareholders and potential investors? Below, I will explain how holding Dexus can impact your portfolio income stream, by analysing the stock’s most recent financial data and dividend attributes. View our latest analysis for Dexus
5 questions to ask before buying a dividend stock
Whenever I am looking at a potential dividend stock investment, I always check these five metrics:
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Is it paying an annual yield above 75% of dividend payers?
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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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Can it afford to pay the current rate of dividends from its earnings?
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Will the company be able to keep paying dividend based on the future earnings growth?
How well does Dexus fit our criteria?
The company currently pays out 34.83% of its earnings as a dividend, meaning the dividend is sufficiently covered by earnings. In the near future, analysts are predicting a higher payout ratio of 82.26%, leading to a dividend yield of around 4.87%. However, EPS is forecasted to fall to A$0.64 in the upcoming year. Therefore, although payout is expected to increase, the fall in earnings may not equate to higher dividend income. If there is one thing that you want to be reliable in your life, it’s dividend stocks and their constant income stream. Not only have dividend payouts from Dexus fallen over the past 10 years, it has also been highly volatile during this time, with drops of over 25% in some years. These characteristics do not bode well for income investors seeking reliable stream of dividends. In terms of its peers, Dexus has a yield of 4.78%, which is on the low-side for reits stocks.
What this means for you:
Are you a shareholder? Whilst there are few things you may like about Dexus from a dividend stock perspective, the truth is that overall it probably is not the best choice for a dividend investor. It may be beneficial exploring other income stocks as alternatives to Dexus or even look at high-growth stocks to supplement your steady income stocks. I recommend continuing your research by taking a look at my interactive free list of dividend rockstars as well as high-growth stocks to potentially add to your holdings.