The board of Marwest Apartment Real Estate Investment Trust( CVE:MAR.UN ) has announced that it will pay a dividend of CA$0.0014 per share on the 15th of December. This makes the dividend yield 2.4%, which will augment investor returns quite nicely.
Marwest Apartment Real Estate Investment Trust's Payment Could Potentially Have Solid Earnings Coverage
While it is great to have a strong dividend yield, we should also consider whether the payment is sustainable. However, Marwest Apartment Real Estate Investment Trust's earnings easily cover the dividend. As a result, a large proportion of what it earned was being reinvested back into the business.
Looking forward, EPS could fall by 24.6% if the company can't turn things around from the last few years. Assuming the dividend continues along recent trends, we believe the payout ratio could be 4.9%, which we are pretty comfortable with and we think is feasible on an earnings basis.
See our latest analysis for Marwest Apartment Real Estate Investment Trust
Marwest Apartment Real Estate Investment Trust Is Still Building Its Track Record
The dividend has been pretty stable looking back, but the company hasn't been paying one for very long. This makes it tough to judge how it would fare through a full economic cycle. The annual payment during the last 4 years was CA$0.015 in 2021, and the most recent fiscal year payment was CA$0.0171. This implies that the company grew its distributions at a yearly rate of about 3.3% over that duration. Marwest Apartment Real Estate Investment Trust hasn't been paying a dividend for very long, so we wouldn't get to excited about its record of growth just yet.
The Dividend Has Limited Growth Potential
Investors could be attracted to the stock based on the quality of its payment history. Unfortunately things aren't as good as they seem. Marwest Apartment Real Estate Investment Trust's earnings per share has shrunk at 25% a year over the past three years. A sharp decline in earnings per share is not great from from a dividend perspective. Even conservative payout ratios can come under pressure if earnings fall far enough.
Our Thoughts On Marwest Apartment Real Estate Investment Trust's Dividend
In summary, while it's good to see that the dividend hasn't been cut, we are a bit cautious about Marwest Apartment Real Estate Investment Trust's payments, as there could be some issues with sustaining them into the future. In the past, the payments have been unstable, but over the short term the dividend could be reliable, with the company generating enough cash to cover it. We would be a touch cautious of relying on this stock primarily for the dividend income.
Investors generally tend to favour companies with a consistent, stable dividend policy as opposed to those operating an irregular one. At the same time, there are other factors our readers should be conscious of before pouring capital into a stock. Case in point: We've spotted 4 warning signs for Marwest Apartment Real Estate Investment Trust (of which 2 don't sit too well with us!) you should know about. Is Marwest Apartment Real Estate Investment Trust not quite the opportunity you were looking for? Why not check out our selection of top dividend stocks.
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This article by Simply Wall St is general in nature.
We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice.
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