Dividends play an important role in compounding returns in the long run and end up forming a sizeable part of investment returns. In the past 10 years Gladstone Commercial Corporation (NASDAQ:GOOD) has returned an average of 9.00% per year to investors in the form of dividend payouts. Does Gladstone Commercial tick all the boxes of a great dividend stock? Below, I’ll take you through my analysis. View our latest analysis for Gladstone Commercial
Here’s how I find good dividend stocks
If you are a dividend investor, you should always assess these five key metrics:
- Is it paying an annual yield above 75% of dividend payers?
- Does it consistently pay out dividends without missing a payment of significantly cutting payout?
- Has dividend per share risen in the past couple of years?
- Does earnings amply cover its dividend payments?
- Will it be able to continue to payout at the current rate in the future?
How does Gladstone Commercial fare?
The current payout ratio for GOOD is negative, which means that it is loss-making, and paying its dividend from its retained earnings. If dividend is a key criteria in your investment consideration, then you need to make sure the dividend stock you’re eyeing out is reliable in its payments. The reality facing GOOD investors is that whilst it has continued to pay shareholders dividend, there has not been any increase in the level of dividends paid in the past decade. Though this may not be a serious red flag, strong dividend stocks should always strive to increase its payout over time. Compared to its peers, Gladstone Commercial produces a yield of 8.13%, which is high for REITs stocks.
If you are building an income portfolio, then Gladstone Commercial is a complicated choice since it has some positive aspects as well as negative ones. 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 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 essential factors you should look at:
- Future Outlook: What are well-informed industry analysts predicting for GOOD’s future growth? Take a look at our free research report of analyst consensus for GOOD’s outlook.
- Valuation: What is GOOD 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 GOOD 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.