Alaris Equity Partners Income Trust (TSE:AD.UN) Could Be A Buy For Its Upcoming Dividend

Alaris Equity Partners Income Trust (TSE:AD.UN) is about to trade ex-dividend in the next four days. The ex-dividend date is one business day before the record date, which is the cut-off date for shareholders to be present on the company's books to be eligible for a dividend payment. The ex-dividend date is important because any transaction on a stock needs to have been settled before the record date in order to be eligible for a dividend. Therefore, if you purchase Alaris Equity Partners Income Trust's shares on or after the 31st of December, you won't be eligible to receive the dividend, when it is paid on the 15th of January.

The company's upcoming dividend is CA$0.34 a share, following on from the last 12 months, when the company distributed a total of CA$1.36 per share to shareholders. Based on the last year's worth of payments, Alaris Equity Partners Income Trust stock has a trailing yield of around 7.1% on the current share price of CA$19.15. If you buy this business for its dividend, you should have an idea of whether Alaris Equity Partners Income Trust's dividend is reliable and sustainable. So we need to check whether the dividend payments are covered, and if earnings are growing.

View our latest analysis for Alaris Equity Partners Income Trust

Dividends are typically paid out of company income, so if a company pays out more than it earned, its dividend is usually at a higher risk of being cut. That's why it's good to see Alaris Equity Partners Income Trust paying out a modest 31% of its earnings.

Companies that pay out less in dividends than they earn in profits generally have more sustainable dividends. The lower the payout ratio, the more wiggle room the business has before it could be forced to cut the dividend.

Click here to see the company's payout ratio, plus analyst estimates of its future dividends.

Have Earnings And Dividends Been Growing?

Companies with consistently growing earnings per share generally make the best dividend stocks, as they usually find it easier to grow dividends per share. 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 Alaris Equity Partners Income Trust's earnings have been skyrocketing, up 21% per annum for the past five years.

Many investors will assess a company's dividend performance by evaluating how much the dividend payments have changed over time. Alaris Equity Partners Income Trust has seen its dividend decline 0.6% per annum on average over the past 10 years, which is not great to see.

Final Takeaway

Should investors buy Alaris Equity Partners Income Trust for the upcoming dividend? When companies are growing rapidly and retaining a majority of the profits within the business, it's usually a sign that reinvesting earnings creates more value than paying dividends to shareholders. This is one of the most attractive investment combinations under this analysis, as it can create substantial value for investors over the long run. In summary, Alaris Equity Partners Income Trust appears to have some promise as a dividend stock, and we'd suggest taking a closer look at it.

In light of that, while Alaris Equity Partners Income Trust has an appealing dividend, it's worth knowing the risks involved with this stock. Every company has risks, and we've spotted 2 warning signs for Alaris Equity Partners Income Trust (of which 1 is potentially serious!) you should know about.

Generally, we wouldn't recommend just buying the first dividend stock you see. Here's a curated list of interesting stocks that are strong dividend payers.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. 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.