Readers hoping to buy Arbor Realty Trust, Inc. (NYSE:ABR) for its dividend will need to make their move shortly, as the stock is about to trade ex-dividend. If you purchase the stock on or after the 14th of November, you won't be eligible to receive this dividend, when it is paid on the 2nd of December.
Arbor Realty Trust's upcoming dividend is US$0.3 a share, following on from the last 12 months, when the company distributed a total of US$1.2 per share to shareholders. Last year's total dividend payments show that Arbor Realty Trust has a trailing yield of 7.8% on the current share price of $15.42. Dividends are an important source of income to many shareholders, but the health of the business is crucial to maintaining those dividends. That's why we should always check whether the dividend payments appear sustainable, and if the company is growing.
Dividends are typically paid from company earnings. If a company pays more in dividends than it earned in profit, then the dividend could be unsustainable. Its dividend payout ratio is 81% of profit, which means the company is paying out a majority of its earnings. The relatively limited profit reinvestment could slow the rate of future earnings growth We'd be concerned if earnings began to decline.
When a company paid out less in dividends than it earned in profit, this generally suggests its dividend is affordable. The lower the % of its profit that it pays out, the greater the margin of safety for the dividend if the business enters a downturn.
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 fall far enough, the company could be forced to cut its dividend. It's encouraging to see Arbor Realty Trust has grown its earnings rapidly, up 29% a year for the past five years.
We'd also point out that Arbor Realty Trust issued a meaningful number of new shares in the past year. It's hard to grow dividends per share when a company keeps creating new shares.
Many investors will assess a company's dividend performance by evaluating how much the dividend payments have changed over time. Since the start of our data, eight years ago, Arbor Realty Trust has lifted its dividend by approximately 19% a year on average. Both per-share earnings and dividends have both been growing rapidly in recent times, which is great to see.
Is Arbor Realty Trust an attractive dividend stock, or better left on the shelf? Earnings per share are growing nicely, and Arbor Realty Trust is paying out a percentage of its earnings that is around the average for dividend-paying stocks. In summary, Arbor Realty Trust appears to have some promise as a dividend stock, and we'd suggest taking a closer look at it.
Curious what other investors think of Arbor Realty Trust? See what analysts 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.
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If you spot an error that warrants correction, please contact the editor at email@example.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.