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Is Scentre Group (ASX:SCG) A Smart Choice For Dividend Investors?

A large part of investment returns can be generated by dividend-paying stock given their role in compounding returns over time. Over the past 4 years, Scentre Group (ASX:SCG) has returned an average of 5.00% per year to shareholders in terms of dividend yield. Let’s dig deeper into whether Scentre Group should have a place in your portfolio. View out our latest analysis for Scentre Group

How I analyze a dividend stock

If you are a dividend investor, you should always assess these five key metrics:

  • Is it paying an annual yield above 75% of dividend payers?

  • Has its dividend been stable over the past (i.e. no missed payments or significant payout cuts)?

  • Has dividend per share amount increased over the past?

  • Can it afford 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?

ASX:SCG Historical Dividend Yield June 24th 18
ASX:SCG Historical Dividend Yield June 24th 18

Does Scentre Group pass our checks?

The current trailing twelve-month payout ratio for the stock is 27.37%, 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 84.32%, leading to a dividend yield of around 5.22%. However, EPS is forecasted to fall to A$0.27 in the upcoming year. Therefore, although payout is expected to increase, the fall in earnings may not equate to higher dividend income.

If there’s one type of stock you want to be reliable, it’s dividend stocks and their stable income-generating ability. Unfortunately, it is really too early to view Scentre Group as a dividend investment. It has only been consistently paying dividends for 4 years, however, standard practice for reliable payers is to look for a 10-year minimum track record.

Compared to its peers, Scentre Group produces a yield of 4.99%, which is on the low-side for REITs stocks.

Next Steps:

If Scentre Group is in your portfolio for cash-generating reasons, there may be better alternatives out there. 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. Below, I’ve compiled three relevant factors you should further research:

  1. Future Outlook: What are well-informed industry analysts predicting for SCG’s future growth? Take a look at our free research report of analyst consensus for SCG’s outlook.

  2. Valuation: What is SCG 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 SCG is currently mispriced by the market.

  3. 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.

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