Be Careful About Buying Liberty Property Trust (NYSE:LPT) For The 3.70% Dividend
Dividends can be underrated but they form a large part of investment returns, playing an important role in compounding returns in the long run. Over the past 10 years, Liberty Property Trust (NYSE:LPT) has returned an average of 6.00% per year to shareholders in terms of dividend yield. Does Liberty Property Trust tick all the boxes of a great dividend stock? Below, I’ll take you through my analysis. Check out our latest analysis for Liberty Property Trust
5 questions I ask before picking a dividend stock
When assessing a stock as a potential addition to my dividend Portfolio, I look at these five areas:
Is their annual yield among the top 25% of dividend payers?
Has it consistently paid a stable dividend without missing a payment or drastically cutting payout?
Has dividend per share amount increased over the past?
Is is able to pay the current rate of dividends from its earnings?
Will the company be able to keep paying dividend based on the future earnings growth?
How well does Liberty Property Trust fit our criteria?
REITs are a special-case dividend payer. This is because a high percentage of their earnings are required to be paid out as dividends. Liberty Property Trust has a trailing twelve-month payout ratio of 87.35%, which is in-line with most other REIT stocks. Going forward, analysts expect LPT’s payout to increase to 122.74% of its earnings, which leads to a dividend yield of around 3.70%. Furthermore, EPS should increase to $1.89. The higher payout forecasted, along with higher earnings, should lead to greater dividend income for investors moving forward. Reliablity is an important factor for dividend stocks, particularly for income investors who want a strong track record of payment and a positive outlook for future payout. Dividend payments from Liberty Property Trust 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, Liberty Property Trust has a yield of 3.70%, which is on the low-side for REITs stocks.
Next Steps:
Now you know to keep in mind the reason why investors should be careful investing in Liberty Property 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. I’ve put together three fundamental factors you should look at:
Future Outlook: What are well-informed industry analysts predicting for LPT’s future growth? Take a look at our free research report of analyst consensus for LPT’s outlook.
Valuation: What is LPT 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 LPT 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.
