Dividends play a key role in compounding returns over time and can form a large part of our portfolio return. Regency Centers Corporation (NYSE:REG) has returned to shareholders over the past 10 years, an average dividend yield of 4.00% annually. Does Regency Centers tick all the boxes of a great dividend stock? Below, I’ll take you through my analysis. See our latest analysis for Regency Centers
5 checks you should use to assess a dividend stock
Whenever I am looking at a potential dividend stock investment, I always check these five metrics:
- Does it pay an annual yield higher than 75% of dividend payers?
- Has it paid dividend every year without dramatically reducing payout in the past?
- Has the amount of dividend per share grown over the past?
- Is its earnings sufficient to payout dividend at the current rate?
- Based on future earnings growth, will it be able to continue to payout dividend at the current rate?
Does Regency Centers pass our checks?
REITs are a special-case dividend payer. This is because a high percentage of their earnings are required to be paid out as dividends. Regency Centers has a trailing twelve-month payout ratio of 148.81%, meaning that a portion of dividend payments are funded by retained earnings. In the near future, analysts are predicting a payout ratio of 143.88%, leading to a dividend yield of 3.68%. Moreover, EPS should increase to $1.52.
If there is one thing that you want to be reliable in your life, it’s dividend stocks and their constant income stream. Dividend payments from Regency Centers have been volatile in the past 10 years, with some years experiencing significant drops of over 25%. These characteristics do not bode well for income investors seeking reliable stream of dividends.
Compared to its peers, Regency Centers produces a yield of 3.54%, which is on the low-side for REITs stocks.
Now you know to keep in mind the reason why investors should be careful investing in Regency Centers for the dividend. On the other hand, if you are not strictly just a dividend investor, the stock could still be offering some interesting investment opportunities. Given that this is purely a dividend analysis, you should always research extensively before deciding whether or not a stock is an appropriate investment for you. I always recommend analysing the company’s fundamentals and underlying business before making an investment decision. I’ve put together three essential factors you should further research:
- Future Outlook: What are well-informed industry analysts predicting for REG’s future growth? Take a look at our free research report of analyst consensus for REG’s outlook.
- Valuation: What is REG worth today? Even if the stock is a cash cow, it’s not worth an infinite price. The intrinsic value infographic in our free research report helps visualize whether REG is currently mispriced by the market.
- Dividend Rockstars: Are there better dividend payers with stronger fundamentals out there? Check out our free list of these great stocks here.
To help readers see pass the short term volatility of the financial market, we aim to bring you a long-term focused research analysis purely driven by fundamental data. Note that our analysis does not factor in the latest price sensitive company announcements.
The author is an independent contributor and at the time of publication had no position in the stocks mentioned.