Marwest Apartment Real Estate Investment Trust's (CVE:MAR.UN) Dividend Will Be CA$0.0013

The board of Marwest Apartment Real Estate Investment Trust (CVE:MAR.UN) has announced that it will pay a dividend of CA$0.0013 per share on the 17th of April. This means that the annual payment will be 2.5% of the current stock price, which is in line with the average for the industry.

While the dividend yield is important for income investors, it is also important to consider any large share price moves, as this will generally outweigh any gains from distributions. Marwest Apartment Real Estate Investment Trust's stock price has reduced by 40% in the last 3 months, which is not ideal for investors and can explain a sharp increase in the dividend yield.

Check out our latest analysis for Marwest Apartment Real Estate Investment Trust

Marwest Apartment Real Estate Investment Trust's Earnings Easily Cover The Distributions

Solid dividend yields are great, but they only really help us if the payment is sustainable. Before making this announcement, Marwest Apartment Real Estate Investment Trust was easily earning enough to cover the dividend. This means that most of what the business earns is being used to help it grow.

EPS is set to fall by 62.4% over the next 12 months if recent trends continue. If the dividend continues along the path it has been on recently, we estimate the payout ratio could be 10%, which is definitely feasible to continue.

Marwest Apartment Real Estate Investment Trust Is Still Building Its Track Record

It's not possible for us to make a backward looking judgement just based on a short payment history. This doesn't mean that the company can't pay a good dividend, but just that we want to wait until it can prove itself.

The Dividend Has Limited Growth Potential

Some investors will be chomping at the bit to buy some of the company's stock based on its dividend history. However, initial appearances might be deceiving. Over the last year, Marwest Apartment Real Estate Investment Trust's EPS has fallen by 62%. Such a large drop can indicate that the business has run into some trouble and might end up in the dividend having to be reduced. We do note though, one year is too short a time to be drawing strong conclusions about a company's future prospects.

In Summary

Overall, it's nice to see a consistent dividend payment, but we think that longer term, the current level of payment might be unsustainable. In the past, the payments have been unstable, but over the short term the dividend could be reliable, with the company generating enough cash to cover it. Overall, we don't think this company has the makings of a good income stock.

It's important to note that companies having a consistent dividend policy will generate greater investor confidence than those having an erratic one. Meanwhile, despite the importance of dividend payments, they are not the only factors our readers should know when assessing a company. Just as an example, we've come across 6 warning signs for Marwest Apartment Real Estate Investment Trust you should be aware of, and 3 of them are a bit unpleasant. Looking for more high-yielding dividend ideas? Try our collection of 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.