Allied Properties Real Estate Investment Trust (TSE:AP.UN) Pays A 0.3% In Just 4
Readers hoping to buy Allied Properties Real Estate Investment Trust (TSE:AP.UN) for its dividend will need to make their move shortly, as the stock is about to trade ex-dividend. This means that investors who purchase shares on or after the 30th of July will not receive the dividend, which will be paid on the 15th of August.
Allied Properties Real Estate Investment Trust's next dividend payment will be CA$0.13 per share. Last year, in total, the company distributed CA$1.60 to shareholders. Looking at the last 12 months of distributions, Allied Properties Real Estate Investment Trust has a trailing yield of approximately 3.2% on its current stock price of CA$49.14. If you buy this business for its dividend, you should have an idea of whether Allied Properties Real Estate Investment Trust's dividend is reliable and sustainable. As a result, readers should always check whether Allied Properties Real Estate Investment Trust has been able to grow its dividends, or if the dividend might be cut.
See our latest analysis for Allied Properties Real Estate Investment Trust
Dividends are usually paid out of company profits, so if a company pays out more than it earned then its dividend is usually at greater risk of being cut. Allied Properties Real Estate Investment Trust paid out more than half (74%) of its earnings last year, which is a regular payout ratio for most companies. While Allied Properties 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. It paid out more than half (73%) of its free cash flow in the past year, which is within an average 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.
Click here to see the company's payout ratio, plus analyst estimates of its future dividends.
Have Earnings And Dividends Been Growing?
Companies with consistently growing earnings per share generally make the best dividend stocks, as they usually find it easier to grow dividends per share. If earnings decline and the company is forced to cut its dividend, investors could watch the value of their investment go up in smoke. Fortunately for readers, Allied Properties Real Estate Investment Trust's earnings per share have been growing at 11% a year for the past five years. Allied Properties Real Estate Investment Trust is paying out a bit over half its earnings, which suggests the company is striking a balance between reinvesting in growth, and paying dividends. Given the quick rate of earnings per share growth and current level of payout, there may be a chance of further dividend increases in the future.
Allied Properties Real Estate Investment Trust also issued more than 5% of its market cap in new stock during the past year, which we feel is likely to hurt its dividend prospects in the long run. It's hard to grow dividends per share when a company keeps creating new shares.
Another key way to measure a company's dividend prospects is by measuring its historical rate of dividend growth. Allied Properties Real Estate Investment Trust has delivered an average of 1.9% per year annual increase in its dividend, based on the past 10 years of dividend payments. Earnings per share have been growing much quicker than dividends, potentially because Allied Properties Real Estate Investment Trust is keeping back more of its profits to grow the business.
Final Takeaway
Should investors buy Allied Properties Real Estate Investment Trust for the upcoming dividend? Higher earnings per share generally lead to higher dividends from dividend-paying stocks over the long run. However, we'd also note that Allied Properties Real Estate Investment Trust is paying out more than half of its earnings and cash flow as profits, which could limit the dividend growth if earnings growth slows. While it does have some good things going for it, we're a bit ambivalent and it would take more to convince us of Allied Properties Real Estate Investment Trust's dividend merits.
Ever wonder what the future holds for Allied Properties Real Estate Investment Trust? See what the three analysts we track are forecasting, with this visualisation of its historical and future estimated earnings and cash flow
A common investment mistake is buying the first interesting stock you see. Here you can find a list of promising 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 editorial-team@simplywallst.com. 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.
