Dividends can be underrated but they form a large part of investment returns, playing an important role in compounding returns in the long run. In the past 8 years CoreSite Realty Corporation (NYSE:COR) has returned an average of 3.00% per year to investors in the form of dividend payouts. Should it have a place in your portfolio? Let’s take a look at CoreSite Realty in more detail. See our latest analysis for CoreSite Realty
5 questions I ask before picking a dividend stock
When researching a dividend stock, I always follow the following screening criteria:
- Is its annual yield among the top 25% of dividend-paying companies?
- Has its dividend been stable over the past (i.e. no missed payments or significant payout cuts)?
- Has dividend per share amount increased over the past?
- Is is able to pay the current rate of dividends from its earnings?
- Will it have the ability to keep paying its dividends going forward?
How does CoreSite Realty fare?
REITs are a special-case dividend payer. This is because a high percentage of their earnings are required to be paid out as dividends. CoreSite Realty has a trailing twelve-month payout ratio of 193.24%, meaning that a portion of dividend payments are funded by retained earnings. Going forward, analysts expect COR’s payout to reduce to 166.87% of its earnings, which leads to a dividend yield of around 4.31%. However, EPS should increase to $2.27, 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. The reality is that it is too early to consider CoreSite Realty as a dividend investment. It has only been consistently paying dividends for 8 years, however, standard practice for reliable payers is to look for a 10-year minimum track record. Compared to its peers, CoreSite Realty generates a yield of 3.73%, 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 CoreSite Realty 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 urge potential investors to try and get a good understanding of the underlying business and its fundamentals before deciding on an investment. There are three fundamental aspects you should look at:
- Future Outlook: What are well-informed industry analysts predicting for COR’s future growth? Take a look at our free research report of analyst consensus for COR’s outlook.
- Valuation: What is COR 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 COR 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.