Is It Smart To Buy Marwest Apartment Real Estate Investment Trust (CVE:MAR.UN) Before It Goes Ex-Dividend?

It looks like Marwest Apartment Real Estate Investment Trust (CVE:MAR.UN) is about to go ex-dividend in the next two days. Typically, the ex-dividend date is one business day before the record date which is the date on which a company determines the shareholders eligible to receive a dividend. It is important to be aware of the ex-dividend date because any trade on the stock needs to have been settled on or before the record date. Thus, you can purchase Marwest Apartment Real Estate Investment Trust's shares before the 29th of April in order to receive the dividend, which the company will pay on the 15th of May.

The company's next dividend payment will be CA$0.001275 per share, on the back of last year when the company paid a total of CA$0.015 to shareholders. Last year's total dividend payments show that Marwest Apartment Real Estate Investment Trust has a trailing yield of 1.8% on the current share price of CA$0.85. Dividends are a major contributor to investment returns for long term holders, but only if the dividend continues to be paid. We need to see whether the dividend is covered by earnings and if it's growing.

See our latest analysis for Marwest Apartment Real Estate Investment 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. Marwest Apartment Real Estate Investment Trust paid out just 1.5% of its profit last year, which we think is conservatively low and leaves plenty of margin for unexpected circumstances.

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 how much of its profit Marwest Apartment Real Estate Investment Trust paid out over the last 12 months.

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 business enters a downturn and the dividend is cut, the company could see its value fall precipitously. That's why we're optimistic about Marwest Apartment Real Estate Investment Trust's earnings, which have ripped higher, up 156% over the past year. While we'd be remiss not to point out that a year is a very short time in dividend investing, it's an encouraging sign so far.

We do note though, one year is too short a time to be drawing strong conclusions about a company's future growth prospects.

The main way most investors will assess a company's dividend prospects is by checking the historical rate of dividend growth. In the last two years, Marwest Apartment Real Estate Investment Trust has lifted its dividend by approximately 1.0% a year on average. Earnings per share have been growing much quicker than dividends, potentially because Marwest Apartment Real Estate Investment Trust is keeping back more of its profits to grow the business.

The Bottom Line

Is Marwest Apartment Real Estate Investment Trust an attractive dividend stock, or better left on the shelf? Typically, companies that are growing rapidly and paying out a low fraction of earnings are keeping the profits for reinvestment in the business. This strategy can add significant value to shareholders over the long term - as long as it's done without issuing too many new shares. In summary, Marwest Apartment Real Estate Investment Trust appears to have some promise as a dividend stock, and we'd suggest taking a closer look at it.

On that note, you'll want to research what risks Marwest Apartment Real Estate Investment Trust is facing. To help with this, we've discovered 4 warning signs for Marwest Apartment Real Estate Investment Trust (1 can't be ignored!) that you ought to be aware of before buying the shares.

If you're in the market for strong dividend payers, we recommend checking our selection of top dividend stocks.

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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.