Shares of CapitaLand Limited (SGX:C31) will begin trading ex-dividend in 2 days. To qualify for the dividend check of S$0.12 per share, investors must have owned the shares prior to 23 April 2019, which is the last day the company's management will finalize their list of shareholders to which they will send dividend payments. Is this future income stream a compelling catalyst for dividend investors to think about the stock as an investment today? Let's take a look at CapitaLand's most recent financial data to examine its dividend characteristics in more detail.
Here's how I find good dividend stocks
Whenever I am looking at a potential dividend stock investment, I always check these five metrics:
- Does it pay an annual yield higher than 75% of dividend payers?
- Does it consistently pay out dividends without missing a payment of significantly cutting payout?
- Has it increased its dividend per share amount over the past?
- Is its earnings sufficient to payout dividend at the current rate?
- Based on future earnings growth, will it be able to continue to payout dividend at the current rate?
How does CapitaLand fare?
The current trailing twelve-month payout ratio for the stock is 29%, which means that the dividend is covered by earnings. In the near future, analysts are predicting a higher payout ratio of 49% which, assuming the share price stays the same, leads to a dividend yield of around 3.5%. However, EPS is forecasted to fall to SGD0.28 in the upcoming year. Therefore, although payout is expected to increase, the fall in earnings may not equate to higher dividend income.
When considering the sustainability of dividends, it is also worth checking the cash flow of a company. Cash flow is important because companies with strong cash flow can usually sustain higher payout ratios.
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. Whilst its per-share payments have increased during the past 10 years, there has been some hiccups. Investors have seen reductions in the dividend per share in the past, although, it has picked up again.
Relative to peers, CapitaLand generates a yield of 3.3%, which is high for Real Estate stocks but still below the market's top dividend payers.
Considering the dividend attributes we analyzed above, CapitaLand is definitely worth keeping an eye on for someone looking to build a dedicated income portfolio. 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. Below, I've compiled three pertinent aspects you should further examine:
- Future Outlook: What are well-informed industry analysts predicting for C31’s future growth? Take a look at our free research report of analyst consensus for C31’s outlook.
- Historical Performance: What has C31's returns been like over the past? Go into more detail in the past track record analysis and take a look at the free visual representations of our analysis for more clarity.
- Other Dividend Rockstars: Are there better dividend payers with stronger fundamentals out there? Check out our free list of these great stocks here.
We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.
If you spot an error that warrants correction, please contact the editor at firstname.lastname@example.org. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned. Thank you for reading.