Attention dividend hunters! Centuria Industrial REIT (ASX:CIP) will be distributing its dividend of A$0.05 per share on the 31 January 2018, and will start trading ex-dividend in 3 days time on the 28 December 2017. 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 Centuria Industrial REIT’s most recent financial data to examine its dividend characteristics in more detail. View our latest analysis for Centuria Industrial REIT
5 questions to ask before buying a dividend stock
When researching a dividend stock, I always follow the following screening criteria:
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Is it paying an annual yield above 75% of dividend payers?
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Has it paid dividend every year without dramatically reducing payout in the past?
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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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Based on future earnings growth, will it be able to continue to payout dividend at the current rate?
Does Centuria Industrial REIT pass our checks?
Centuria Industrial REIT has a payout ratio of 85.50%, meaning the dividend is sufficiently covered by earnings. Going forward, analysts expect CIP’s payout to increase to 95.36% of its earnings, which leads to a dividend yield of around 7.56%. In addition to this, EPS should increase to A$0.27. The higher payout forecasted, along with higher earnings, should lead to greater dividend income for investors moving forward. However this does bring about uncertainty around the sustainability of the payout ratio. 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 Centuria Industrial REIT 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. In terms of its peers, Centuria Industrial REIT generates a yield of 7.82%, which is high for reits stocks.
What this means for you:
Are you a shareholder? Investors of Centuria Industrial REIT can continue to expect strong dividends from the stock moving forward. With its favorable dividend characteristics, Centuria Industrial REIT is one worth keeping around in your income portfolio. However, depending on your current holdings, it may be beneficial exploring other income stocks to increase diversification, or even look at high-growth stocks to complement your steady income stocks. I suggest continuing your research by exploring my interactive free list of dividend rockstars as well as high-growth stocks to potentially add to your holdings.