Dividends play an important role in compounding returns in the long run and end up forming a sizeable part of investment returns. CatchMark Timber Trust Inc (NYSE:CTT) has returned to shareholders over the past 5 years, an average dividend yield of 4.00% annually. Does CatchMark Timber Trust tick all the boxes of a great dividend stock? Below, I’ll take you through my analysis. Check out our latest analysis for CatchMark Timber Trust
5 checks you should use to assess a dividend stock
When researching a dividend stock, I always follow the following screening criteria:
- Is their annual yield among the top 25% of dividend payers?
- Has it paid dividend every year without dramatically reducing payout in the past?
- Has dividend per share risen in the past couple of years?
- Is its earnings sufficient to payout dividend at the current rate?
- Will the company be able to keep paying dividend based on the future earnings growth?
Does CatchMark Timber Trust pass our checks?
The current payout ratio for CTT is negative, which means that it is loss-making, and paying its dividend from its retained earnings.
If there is one thing that you want to be reliable in your life, it’s dividend stocks and their constant income stream. The reality is that it is too early to consider CatchMark Timber Trust as a dividend investment. It has only been consistently paying dividends for 5 years, however, standard practice for reliable payers is to look for a 10-year minimum track record.
In terms of its peers, CatchMark Timber Trust generates a yield of 4.30%, 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 CatchMark Timber Trust 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, I recommend taking sufficient time to understand its core business and determine whether the company and its investment properties suit your overall goals. Below, I’ve compiled three pertinent factors you should further research:
- Future Outlook: What are well-informed industry analysts predicting for CTT’s future growth? Take a look at our free research report of analyst consensus for CTT’s outlook.
- Valuation: What is CTT 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 CTT 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.