Starhill Global Real Estate Investment Trust (SGX:P40U) is about to trade ex-dividend in the next 4 days. Investors can purchase shares before the 6th of August in order to be eligible for this dividend, which will be paid on the 29th of August.
Starhill Global Real Estate Investment Trust's next dividend payment will be S$0.011 per share, and in the last 12 months, the company paid a total of S$0.045 per share. Based on the last year's worth of payments, Starhill Global Real Estate Investment Trust stock has a trailing yield of around 5.7% on the current share price of SGD0.78. We love seeing companies pay a dividend, but it's also important to be sure that laying the golden eggs isn't going to kill our golden goose! That's why we should always check whether the dividend payments appear sustainable, and if the company is growing.
If a company pays out more in dividends than it earned, then the dividend might become unsustainable - hardly an ideal situation. Starhill Global Real Estate Investment Trust paid out 73% of its earnings to investors last year, a normal payout level for most businesses. While Starhill Global Real Estate Investment Trust seems to be paying out a very high percentage of its income, REITs have different dividend payment behaviour and so, while we don't think this is great, we also don't think it is unusual. Yet cash flow is typically more important than profit for assessing dividend sustainability, so we should always check if the company generated enough cash to afford its dividend. Over the last year it paid out 73% of its free cash flow as dividends, within the usual range for most companies.
It's encouraging to see that the dividend is covered by both profit and cash flow. This generally suggests the dividend is sustainable, as long as earnings don't drop precipitously.
Have Earnings And Dividends Been Growing?
Stocks with flat earnings can still be attractive dividend payers, but it is important to be more conservative with your approach and demand a greater margin for safety when it comes to dividend sustainability. If earnings fall far enough, the company could be forced to cut its dividend. It's not encouraging to see that Starhill Global Real Estate Investment Trust's earnings are effectively flat over the past five years. We'd take that over an earnings decline any day, but in the long run, the best dividend stocks all grow their earnings per share.
Another key way to measure a company's dividend prospects is by measuring its historical rate of dividend growth. Starhill Global Real Estate Investment Trust has seen its dividend decline 4.5% per annum on average over the past 10 years, which is not great to see.
To Sum It Up
Is Starhill Global Real Estate Investment Trust an attractive dividend stock, or better left on the shelf? While earnings per share are flat, at least Starhill Global Real Estate Investment Trust has not committed itself to an unsustainable dividend, with its earnings and cashflow payout ratios within reasonable bounds. It's not an attractive combination from a dividend perspective, and we're inclined to pass on this one for the time being.
Ever wonder what the future holds for Starhill Global Real Estate Investment Trust? See what the seven analysts we track are forecasting, with this visualisation of its historical and future estimated earnings and cash flow
We wouldn't recommend just buying the first dividend stock you see, though. Here's a list of interesting dividend stocks with a greater than 2% yield and an upcoming dividend.
We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.
If you spot an error that warrants correction, please contact the editor at firstname.lastname@example.org. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned. Thank you for reading.