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Over the past 10 years Cedar Woods Properties Limited (ASX:CWP) has grown its dividend payouts from A$0.070 to A$0.36. With a market cap of AU$429m, Cedar Woods Properties pays out 41% of its earnings, leading to a 6.7% yield. Let me elaborate on you why the stock stands out for income investors like myself.
View our latest analysis for Cedar Woods Properties
What Is A Dividend Rock Star?
It is a stock that pays a consistent, reliable and competitive dividend over a long period of time, and is expected to continue to pay in the same manner many years to come. More specifically:
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Its annual yield is among the top 25% of dividend payers
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It has paid dividend every year without dramatically reducing payout in the past
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Its dividend per share amount has increased over the past
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It can afford to pay the current rate of dividends from its earnings
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It has the ability to keep paying its dividends going forward
High Yield And Dependable
The company’s dividend yield stands at 6.7%, which is high for Real Estate stocks. But the real reason Cedar Woods Properties stands out is because it has a proven track record of continuously paying out this level of dividends, from earnings, to shareholders and can be expected to continue paying in the future. This is a highly desirable trait for a stock holding if you’re investor who wants a robust cash inflow from your portfolio over a long period of time.
If there is one thing that you want to be reliable in your life, it’s dividend stocks and their constant income stream. In the case of CWP it has increased its DPS from A$0.070 to A$0.36 in the past 10 years. It has also been paying out dividend consistently during this time, as you’d expect for a company increasing its dividend levels. These are all positive signs of a great, reliable dividend stock.
The company currently pays out 41% of its earnings as a dividend, according to its trailing twelve-month data, meaning the dividend is sufficiently covered by earnings. In the near future, analysts are predicting a higher payout ratio of 53% which, assuming the share price stays the same, leads to a dividend yield of 6.6%. However, EPS is forecasted to fall to A$0.67 in the upcoming year. Therefore, although payout is expected to increase, the fall in earnings may not equate to higher dividend income.
If you want to dive deeper into the sustainability of a certain payout ratio, you may wish to consider the cash flow of the business. Cash flow is important because companies with strong cash flow can usually sustain higher payout ratios.