Dividends can be underrated but they form a large part of investment returns, playing an important role in compounding returns in the long run. In the past 5 years CT Real Estate Investment Trust (TSE:CRT.UN) has returned an average of 5.00% per year to investors in the form of dividend payouts. Let’s dig deeper into whether CT Real Estate Investment Trust should have a place in your portfolio. See our latest analysis for CT Real Estate Investment Trust
5 checks you should use to assess 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 the amount of dividend per share grown over the past?
- Can it afford to pay the current rate of dividends from its earnings?
- Based on future earnings growth, will it be able to continue to payout dividend at the current rate?
How well does CT Real Estate Investment Trust fit our criteria?
REITs are a special-case dividend payer. This is because a high percentage of their earnings are required to be paid out as dividends. The company currently pays out 112.69% of its earnings as a dividend, according to its trailing twelve-month data, meaning that a portion of dividend payments are 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. Unfortunately, it is really too early to view CT Real Estate Investment Trust as a dividend investment. It has only been consistently paying dividends for 5 years, however, standard practice for reliable payers is to look for a 10-year minimum track record.Relative to peers, CT Real Estate Investment Trust generates a yield of 5.61%, which is high for REITs stocks but still below the market’s top dividend payers.
After digging a little deeper into CT Real Estate Investment Trust’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 recommend taking sufficient time to understand its core business and determine whether the company and its investment properties suit your overall goals. There are three key aspects you should look at:
- Future Outlook: What are well-informed industry analysts predicting for CRT.UN’s future growth? Take a look at our free research report of analyst consensus for CRT.UN’s outlook.
- Valuation: What is CRT.UN 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 CRT.UN 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.