Service Properties Trust's Dividend Analysis
An In-depth Look at the Dividend Performance and Sustainability of Service Properties Trust (NASDAQ:SVC)
Service Properties Trust (NASDAQ:SVC) recently announced a dividend of $0.2 per share, payable on 2023-11-16, with the ex-dividend date set for 2023-10-20. 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.
Overview of Service Properties Trust
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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.
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.
Service Properties Trust's Dividend Yield and Growth
As of today, Service Properties Trust currently has a 12-month trailing dividend yield of 10.88% and a 12-month forward dividend yield of 10.88%. 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 0.34%.
Payout Ratio and Profitability: Assessing Dividend Sustainability
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 2023-06-30, 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 2023-06-30, suggesting fair profitability. The company has reported net profit in 7 years out of past 10 years.
The Future Outlook: Growth Metrics
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 than approximately 81.65% of global competitors.
Conclusion
Considering Service Properties Trust's dividend payments, growth rate, payout ratio, profitability, and growth metrics, it appears that the company's dividend performance is stable. However, the negative dividend growth rate and the underperformance in the revenue growth rate compared to global competitors may raise concerns about the sustainability of future dividends. Investors should keep a close watch on these metrics and the company's overall financial health before making investment decisions.
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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.
