A large part of investment returns can be generated by dividend-paying stock given their role in compounding returns over time. Over the past 10 years, Vornado Realty Trust (NYSE:VNO) has returned an average of 4.00% per year to shareholders in terms of dividend yield. Should it have a place in your portfolio? Let’s take a look at Vornado Realty Trust in more detail. Check out our latest analysis for Vornado Realty Trust
How I analyze a dividend stock
Whenever I am looking at a potential dividend stock investment, I always check these five metrics:
- 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 the amount of dividend per share grown over the past?
- Can it afford to pay the current rate of dividends from its earnings?
- Will it have the ability to keep paying its dividends going forward?
How does Vornado Realty Trust fare?
Although REITs are expected to payout a high portion of the earnings, Vornado Realty Trust currently pays out more than double its net income, meaning that dividend is predominantly funded by retained earnings. Going forward, analysts expect VNO’s payout to fall to 110.05% of its earnings, which leads to a dividend yield of 3.51%. In addition to this, EPS should increase to $1.36, meaning that the lower payout ratio does not necessarily implicate a lower dividend payment.
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 Vornado Realty Trust have been volatile in the past 10 years, with some years experiencing significant drops of over 25%. This means that dividend hunters should probably steer clear of the stock, at least for now until the track record improves.
Relative to peers, Vornado Realty Trust produces a yield of 3.43%, 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 Vornado Realty Trust for the dividend. But if you are not exclusively a dividend investor, the stock could still be an interesting investment opportunity. 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. There are three important aspects you should further research:
- Future Outlook: What are well-informed industry analysts predicting for VNO’s future growth? Take a look at our free research report of analyst consensus for VNO’s outlook.
- Valuation: What is VNO 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 VNO 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.