Service Properties Trust's Dividend Analysis
Assessing the Sustainability of Service Properties Trust's Dividend
Service Properties Trust (NASDAQ:SVC) recently announced a dividend of $0.20 per share, payable on February 15, 2024, with the ex-dividend date set for January 19, 2024. 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 delve into Service Properties Trust's dividend performance and assess its sustainability.
What Does Service Properties Trust Do?
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Service Properties Trust is a real estate investment trust that owns hotel properties. These properties are located primarily in the United States, along with Canada and Puerto Rico. The company operates through its hotel investment unit and net lease investments. The firm derives the majority of its revenue from the hotel real estate investments unit. The hotels are distinguished between their service levels, which include full service, select service, and extended stay; and chain scale, which includes luxury, upper upscale, upscale, upper midscale, and midscale. Most hotels are extended stay or upscale. Some of the major hotel brands include Courtyard by Marriott, Royal Sonesta, Crowne Plaza Hotels & Resorts, and Hyatt Place.
A Glimpse at Service Properties Trust's Dividend History
Service Properties Trust has maintained a consistent dividend payment record since 1995. Dividends are currently distributed on a quarterly basis. Below is a chart showing annual Dividends Per Share for tracking historical trends.
Breaking Down Service Properties Trust's Dividend Yield and Growth
As of today, Service Properties Trust currently has a 12-month trailing dividend yield of 9.96% and a 12-month forward dividend yield of 9.96%. This suggests an expectation of same dividend payments over the next 12 months. Over the past three years, Service Properties Trust's annual dividend growth rate was -52.50%. Extended to a five-year horizon, this rate increased to -49.90% per year. And over the past decade, Service Properties Trust's annual dividends per share growth rate stands at -23.40%.
Based on Service Properties Trust's dividend yield and five-year growth rate, the 5-year yield on cost of Service Properties Trust stock as of today is approximately 0.31%.
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 September 30, 2023, Service Properties Trust's dividend payout ratio is 0.00.
Service Properties Trust's profitability rank, offers an understanding of the company's earnings prowess relative to its peers. GuruFocus ranks Service Properties Trust's profitability 6 out of 10 as of September 30, 2023, suggesting fair profitability. The company has reported net profit in 7 years out of the past 10 years.
Growth Metrics: The Future Outlook
To ensure the sustainability of dividends, a company must have robust growth metrics. Service Properties Trust's growth rank of 6 out of 10 suggests that the company has a fair growth outlook.
Revenue is the lifeblood of any company, and Service Properties Trust's revenue per share, combined with the 3-year revenue growth rate, indicates a strong revenue model. Service Properties Trust's revenue has increased by approximately -7.10% per year on average, a rate that underperforms approximately 82.13% of global competitors.
Next Steps
Considering Service Properties Trust's consistent dividend history, current high yield, and the company's financial metrics, investors may regard SVC as an interesting option for income. However, the negative dividend growth rate and the underperformance in revenue growth compared to peers are factors that cannot be overlooked. These elements highlight the importance of further due diligence before making any investment decisions. Value investors may want to analyze the underlying fundamentals of Service Properties Trust further and monitor any industry trends or strategic initiatives that could impact future dividend sustainability.
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.
