Is Link Real Estate Investment Trust (HKG:823) A Good Pick For Income Investors?
Link Real Estate Investment Trust (SEHK:823) has pleased shareholders over the past 10 years, paying out an average dividend of 4.00% annually. The stock currently pays out a dividend yield of 3.51%, and has a market cap of HK$150.57B. Does Link Real Estate Investment Trust tick all the boxes of a great dividend stock? Below, I’ll take you through my analysis. View our latest analysis for Link Real Estate Investment Trust
How I analyze a dividend stock
Whenever I am looking at a potential dividend stock investment, I always check these five metrics:
Is it the top 25% annual dividend yield payer?
Does it consistently pay out dividends without missing a payment or significantly cutting payout?
Has it increased its dividend per share amount over the past?
Is it able to pay the current rate of dividends from its earnings?
Will the company be able to keep paying dividend based on the future earnings growth?
Does Link Real Estate Investment Trust pass our checks?
Link Real Estate Investment Trust has a trailing twelve-month payout ratio of 22.10%, 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. Going forward, analysts expect 823’s payout to increase to 107.20% of its earnings, which leads to a dividend yield of 3.91%. However, EPS is forecasted to fall to HK$2.84 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. In the case of 823 it has increased its DPS from HK$0.72 to HK$2.43 in the past 10 years. During this period it has not missed a payment, as one would expect for a company increasing its dividend. This is an impressive feat, which makes 823 a true dividend rockstar. Relative to peers, Link Real Estate Investment Trust generates a yield of 3.51%, which is on the low-side for REITs stocks.
Next Steps:
Taking into account the dividend metrics, Link Real Estate Investment Trust ticks most of the boxes as a strong dividend investment, putting it in my list of top dividend payers. Given that this is purely a dividend analysis, you should always research extensively before deciding whether or not a stock is an appropriate investment for you. I always recommend analysing the company’s fundamentals and underlying business before making an investment decision. I’ve put together three relevant factors you should look at:
1. Future Outlook: What are well-informed industry analysts predicting for 823’s future growth? Take a look at our free research report of analyst consensus for 823’s outlook.
2. Valuation: What is 823 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 823 is currently mispriced by the market.
3. Other 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.
