Why You Might Be Interested In New England Realty Associates Limited Partnership (NYSEMKT:NEN) For Its Upcoming Dividend
New England Realty Associates Limited Partnership (NYSEMKT:NEN) is about to trade ex-dividend in the next 4 days. This means that investors who purchase shares on or after the 13th of March will not receive the dividend, which will be paid on the 31st of March.
New England Realty Associates Limited Partnership's upcoming dividend is US$0.32 a share, following on from the last 12 months, when the company distributed a total of US$1.28 per share to shareholders. Based on the last year's worth of payments, New England Realty Associates Limited Partnership has a trailing yield of 2.2% on the current stock price of $58.5. If you buy this business for its dividend, you should have an idea of whether New England Realty Associates Limited Partnership's dividend is reliable and sustainable. 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. New England Realty Associates Limited Partnership paid out more than half (75%) of its earnings last year, which is a regular payout ratio for most companies. Yet cash flows are even more important than profits for assessing a dividend, so we need to see if the company generated enough cash to pay its distribution. It paid out 22% of its free cash flow as dividends last year, which is conservatively low.
It's positive to see that New England Realty Associates Limited Partnership's dividend is covered by both profits and cash flow, since this is generally a sign that the dividend is sustainable, and a lower payout ratio usually suggests a greater margin of safety before the dividend gets cut.
Have Earnings And Dividends Been Growing?
Businesses with strong growth prospects usually make the best dividend payers, because it's easier to grow dividends when earnings per share are improving. Investors love dividends, so if earnings fall and the dividend is reduced, expect a stock to be sold off heavily at the same time. That's why it's comforting to see New England Realty Associates Limited Partnership's earnings have been skyrocketing, up 27% per annum for the past five years. Management appears to be striking a nice balance between reinvesting for growth and paying dividends to shareholders. With a reasonable payout ratio, profits being reinvested, and some earnings growth, New England Realty Associates Limited Partnership could have strong prospects for future increases to the dividend.
The main way most investors will assess a company's dividend prospects is by checking the historical rate of dividend growth. New England Realty Associates Limited Partnership has delivered an average of 3.2% per year annual increase in its dividend, based on the past ten years of dividend payments. Earnings per share have been growing much quicker than dividends, potentially because New England Realty Associates Limited Partnership is keeping back more of its profits to grow the business.
To Sum It Up
Has New England Realty Associates Limited Partnership got what it takes to maintain its dividend payments? 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. It's a promising combination that should mark this company worthy of closer attention.
While it's tempting to invest in New England Realty Associates Limited Partnership for the dividends alone, you should always be mindful of the risks involved. Be aware that New England Realty Associates Limited Partnership is showing 2 warning signs in our investment analysis, and 1 of those doesn't sit too well with us...
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.
If you spot an error that warrants correction, please contact the editor at editorial-team@simplywallst.com. 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. Simply Wall St has no position in the stocks mentioned.
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