Marwest Apartment Real Estate Investment Trust (CVE:MAR.UN) Looks Like A Good Stock, And It's Going Ex-Dividend Soon

Some investors rely on dividends for growing their wealth, and if you're one of those dividend sleuths, you might be intrigued to know that Marwest Apartment Real Estate Investment Trust (CVE:MAR.UN) is about to go ex-dividend in just four days. The ex-dividend date occurs one day before the record date which is the day on which shareholders need to be on the company's books in order 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. Therefore, if you purchase Marwest Apartment Real Estate Investment 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 next dividend payment will be CA$0.0013 per share, on the back of last year when the company paid a total of CA$0.016 to shareholders. Calculating the last year's worth of payments shows that Marwest Apartment Real Estate Investment Trust has a trailing yield of 2.2% on the current share price of CA$0.70. Dividends are an important source of income to many shareholders, but the health of the business is crucial to maintaining those dividends. So we need to check whether the dividend payments are covered, and if earnings are growing.

See our latest analysis for Marwest Apartment Real Estate Investment Trust

If a company pays out more in dividends than it earned, then the dividend might become unsustainable - hardly an ideal situation. Marwest Apartment Real Estate Investment Trust is paying out just 0.8% of its profit after tax, which is comfortably low and leaves plenty of breathing room in the case of adverse events.

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?

Businesses with strong growth prospects usually make the best dividend payers, because it's easier to grow dividends when earnings per share are improving. If earnings fall far enough, the company could be forced to cut its dividend. That's why it's comforting to see Marwest Apartment Real Estate Investment Trust's earnings have been skyrocketing, up 67% per annum for the past three years.

The main way most investors will assess a company's dividend prospects is by checking the historical rate of dividend growth. Since the start of our data, three years ago, Marwest Apartment Real Estate Investment Trust has lifted its dividend by approximately 1.3% 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

Has Marwest Apartment Real Estate Investment Trust got what it takes to maintain its dividend payments? 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 strategy can add significant value to shareholders over the long term - as long as it's done without issuing too many new shares. We think this is a pretty attractive combination, and would be interested in investigating Marwest Apartment Real Estate Investment Trust more closely.

While it's tempting to invest in Marwest Apartment Real Estate Investment Trust for the dividends alone, you should always be mindful of the risks involved. We've identified 3 warning signs with Marwest Apartment Real Estate Investment Trust (at least 2 which make us uncomfortable), and understanding them should be part of your investment process.

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.