Why You Should Not Buy Urban Edge Properties (NYSE:UE) For Dividend
Dividends play a key role in compounding returns over time and can form a large part of our portfolio return. Over the past 3 years, Urban Edge Properties (NYSE:UE) has returned an average of 4.00% per year to shareholders in terms of dividend yield. Should it have a place in your portfolio? Let’s take a look at Urban Edge Properties in more detail. Check out our latest analysis for Urban Edge Properties
5 questions to ask before buying 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 it paid dividend every year without dramatically reducing payout in the past?
Has it increased its dividend per share amount over the past?
Can it afford 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 Urban Edge Properties pass our checks?
Although REITs are expected to payout a high portion of the earnings, Urban Edge Properties currently pays out more than double its net income, meaning that dividend is predominantly funded by retained earnings. Furthermore, analysts have not forecasted a dividends per share for the future, which makes it hard to determine the yield shareholders should expect, and whether the current payout is sustainable, moving forward.
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. The reality is that it is too early to consider Urban Edge Properties as a dividend investment. It has only been consistently paying dividends for 3 years, however, standard practice for reliable payers is to look for a 10-year minimum track record.
Relative to peers, Urban Edge Properties produces a yield of 3.84%, which is on the low-side for REITs stocks.
Next Steps:
After digging a little deeper into Urban Edge Properties’s yield, it’s easy to see why you should be cautious investing in the company just for the dividend. 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 urge potential investors to try and get a good understanding of the underlying business and its fundamentals before deciding on an investment. I’ve put together three key factors you should further research:
Future Outlook: What are well-informed industry analysts predicting for UE’s future growth? Take a look at our free research report of analyst consensus for UE’s outlook.
Valuation: What is UE 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 UE is currently mispriced by the market.
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.
