Dividends play a key role in compounding returns over time and can form a large part of our portfolio return. Over the past 10 years, First Industrial Realty Trust Inc (NYSE:FR) has returned an average of 3.00% per year to shareholders in terms of dividend yield. Should it have a place in your portfolio? Let’s take a look at First Industrial Realty Trust in more detail. See our latest analysis for First Industrial Realty Trust
5 questions to ask before buying a dividend stock
If you are a dividend investor, you should always assess these five key 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 dividend per share amount increased over the past?
- Is is able to pay the current rate of dividends from its earnings?
- Will it be able to continue to payout at the current rate in the future?
Does First Industrial Realty Trust pass our checks?
First Industrial Realty Trust has a trailing twelve-month payout ratio of 49.47%, which is rather low compared to other REITs. Generally, REITs are expected to pay out the majority of its earnings to provide a regular income stream for their investors. In the near future, analysts are predicting a higher payout ratio of 132.01%, leading to a dividend yield of around 3.27%. However, EPS is forecasted to fall to $0.59 in the upcoming year. Therefore, although payout is expected to increase, the fall in earnings may not equate to higher dividend income. This also brings about uncertainty around the sustainability of the payout ratio. 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. Not only have dividend payouts from First Industrial Realty Trust fallen over the past 10 years, it has also been highly volatile during this time, with drops of over 25% in some years. This means that dividend hunters should probably steer clear of the stock, at least for now until the track record improves. Compared to its peers, First Industrial Realty Trust generates a yield of 2.97%, 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 First Industrial 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. I’ve put together three fundamental factors you should look at:
- Future Outlook: What are well-informed industry analysts predicting for FR’s future growth? Take a look at our free research report of analyst consensus for FR’s outlook.
- Valuation: What is FR 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 FR 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.