There's A Lot To Like About New England Realty Associates Limited Partnership's (NYSEMKT:NEN) Upcoming US$0.32 Dividend
Readers hoping to buy New England Realty Associates Limited Partnership (NYSEMKT:NEN) for its dividend will need to make their move shortly, as the stock is about to trade ex-dividend. If you purchase the stock on or after the 18th of September, you won't be eligible to receive this dividend, when it is paid on the 30th of September.
New England Realty Associates Limited Partnership's next dividend payment will be US$0.32 per share. Last year, in total, the company distributed US$1.28 to shareholders. Looking at the last 12 months of distributions, New England Realty Associates Limited Partnership has a trailing yield of approximately 2.6% on its current stock price of $49.5. Dividends are an important source of income to many shareholders, but the health of the business is crucial to maintaining those dividends. That's why we should always check whether the dividend payments appear sustainable, and if the company is growing.
View our latest analysis for New England Realty Associates Limited Partnership
Dividends are usually paid out of company profits, so if a company pays out more than it earned then its dividend is usually at greater risk of being cut. It paid out 77% of its earnings as dividends last year, which is not unreasonable, but limits reinvestment in the business and leaves the dividend vulnerable to a business downturn. We'd be concerned if earnings began to decline. That said, even highly profitable companies sometimes might not generate enough cash to pay the dividend, which is why we should always check if the dividend is covered by cash flow. Luckily it paid out just 23% of its free cash flow last year.
It's encouraging to see that the dividend is covered by both profit and cash flow. This generally suggests the dividend is sustainable, as long as earnings don't drop precipitously.
Have Earnings And Dividends Been Growing?
Stocks in companies that generate sustainable earnings growth often make the best dividend prospects, as it is easier to lift the dividend when earnings are rising. If earnings fall far enough, the company could be forced to cut its dividend. It's encouraging to see New England Realty Associates Limited Partnership has grown its earnings rapidly, up 44% a year for the past five years. The company is paying out more than three-quarters of its earnings, but it is also generating strong earnings growth.
Many investors will assess a company's dividend performance by evaluating how much the dividend payments have changed over time. New England Realty Associates Limited Partnership has delivered an average of 3.2% per year annual increase in its dividend, based on the past 10 years of dividend payments. It's good to see both earnings and the dividend have improved - although the former has been rising much quicker than the latter, possibly due to the company reinvesting more of its profits in growth.
To Sum It Up
From a dividend perspective, should investors buy or avoid New England Realty Associates Limited Partnership? New England Realty Associates Limited Partnership's growing earnings per share and conservative payout ratios make for a decent combination. We also like that it paid out a lower percentage of its cash flow. New England Realty Associates Limited Partnership looks solid on this analysis overall, and we'd definitely consider investigating it more closely.
On that note, you'll want to research what risks New England Realty Associates Limited Partnership is facing. For instance, we've identified 2 warning signs for New England Realty Associates Limited Partnership (1 is a bit concerning) you should be aware of.
If you're in the market for dividend stocks, we recommend checking our list of top dividend stocks with a greater than 2% yield and an upcoming dividend.
This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
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