NNN REIT Inc's Dividend Analysis
Assessing the Sustainability of NNN REIT Inc's Dividend Payments
NNN REIT Inc (NYSE:NNN) recently announced a dividend of $0.57 per share, payable on 2024-02-15, with the ex-dividend date set for 2024-01-30. As investors look forward to this upcoming payment, the spotlight also shines on the company's dividend history, yield, and growth rates. Using the data from GuruFocus, let's look into NNN REIT Inc's dividend performance and assess its sustainability.
What Does NNN REIT Inc Do?
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NNN REIT Inc is a real estate investment trust that invests in and develops properties throughout the United States. The company generates revenue from leasing properties to tenants, including convenience stores, automotive services, fitness centers, theatres, restaurants, and banks. Rents from convenience stores and restaurants contribute the majority proportion of total revenue, followed by automotive services, entertainment venues, and others. Most of the company's properties are located in the South and Southeast of the United States.
A Glimpse at NNN REIT Inc's Dividend History
NNN REIT Inc has maintained a consistent dividend payment record since 1985. Dividends are currently distributed on a quarterly basis. NNN REIT Inc has increased its dividend each year since 1988. The stock is thus listed as a dividend aristocrat, an honor that is given to companies that have increased their dividend each year for at least the past 36 years. Below is a chart showing annual Dividends Per Share for tracking historical trends.
Breaking Down NNN REIT Inc's Dividend Yield and Growth
As of today, NNN REIT Inc currently has a 12-month trailing dividend yield of 5.42% and a 12-month forward dividend yield of 5.46%. This suggests an expectation of increased dividend payments over the next 12 months.
Over the past three years, NNN REIT Inc's annual dividend growth rate was 2.10%. Extended to a five-year horizon, this rate increased to 2.90% per year. And over the past decade, NNN REIT Inc's annual dividends per share growth rate stands at 3.50%. Based on NNN REIT Inc's dividend yield and five-year growth rate, the 5-year yield on cost of NNN REIT Inc stock as of today is approximately 6.25%.
The Sustainability Question: Payout Ratio and Profitability
To assess the sustainability of the dividend, one needs to evaluate the company's payout ratio. The dividend payout ratio provides insights into the portion of earnings the company distributes as dividends. A lower ratio suggests that the company retains a significant part of its earnings, thereby ensuring the availability of funds for future growth and unexpected downturns. As of 2023-09-30, NNN REIT Inc's dividend payout ratio is 1.04, which may suggest that the company's dividend may not be sustainable.
NNN REIT Inc's profitability rank, offers an understanding of the company's earnings prowess relative to its peers. GuruFocus ranks NNN REIT Inc's profitability 8 out of 10 as of 2023-09-30, suggesting good profitability prospects. The company has reported positive net income for each year over the past decade, further solidifying its high profitability.
Growth Metrics: The Future Outlook
To ensure the sustainability of dividends, a company must have robust growth metrics. NNN REIT Inc's growth rank of 8 out of 10 suggests that the company's growth trajectory is good relative to its competitors.
Revenue is the lifeblood of any company, and NNN REIT Inc's revenue per share, combined with the 3-year revenue growth rate, indicates a strong revenue model. NNN REIT Inc's revenue has increased by approximately 2.40% per year on average, a rate that outperforms approximately 58.46% of global competitors.
The company's 3-year EPS growth rate showcases its capability to grow its earnings, a critical component for sustaining dividends in the long run. During the past three years, NNN REIT Inc's earnings increased by approximately 5.90% per year on average, a rate that outperforms approximately 59.74% of global competitors.
Lastly, the company's 5-year EBITDA growth rate of 4.20%, which outperforms approximately 59.04% of global competitors.
Next Steps
When considering the future of NNN REIT Inc's dividend payments, investors should weigh the company's consistent dividend growth rate against the current payout ratio, profitability, and growth metrics. While the payout ratio may raise some concerns about sustainability, the company's strong profitability and growth rankings offer a counterbalance. As NNN REIT Inc continues to navigate the market, value investors should monitor these indicators to guide their investment decisions. GuruFocus Premium users can screen for high-dividend yield stocks using the High Dividend Yield Screener.
This article, generated by GuruFocus, is designed to provide general insights and is not tailored financial advice. Our commentary is rooted in historical data and analyst projections, utilizing an impartial methodology, and is not intended to serve as specific investment guidance. It does not formulate a recommendation to purchase or divest any stock and does not consider individual investment objectives or financial circumstances. Our objective is to deliver long-term, fundamental data-driven analysis. Be aware that our analysis might not incorporate the most recent, price-sensitive company announcements or qualitative information. GuruFocus holds no position in the stocks mentioned herein.
This article first appeared on GuruFocus.
