Over the past 10 years Property For Industry Limited (NZSE:PFI) has returned an average of 5.00% per year from dividend payouts. The stock currently pays out a dividend yield of 4.38%, and has a market cap of NZ$860.30m. Should it have a place in your portfolio? Let’s take a look at in more detail. See our latest analysis for Property For Industry
5 questions I ask before picking a dividend stock
Whenever I am looking at a potential dividend stock investment, I always check these five metrics:
- Does it pay an annual yield higher than 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?
- Is its earnings sufficient to payout dividend at the current rate?
- Will it have the ability to keep paying its dividends going forward?
How does Property For Industry fare?The company currently pays out 66.25% of its earnings as a dividend, according to its trailing twelve-month data, which is rather low compared to other REITs. Generally, REITs are expected to pay out the majority of its earnings to provide a regular income stream for their investors. Going forward, analysts expect PFI’s payout to increase to 90.19% of its earnings, which leads to a dividend yield of 4.57%. However, EPS is forecasted to fall to NZ$0.10 in the upcoming year. Therefore, although payout is expected to increase, the fall in earnings may not equate to higher dividend income. This also brings about uncertainty around the sustainability of the payout ratio. If there’s one type of stock you want to be reliable, it’s dividend stocks and their stable income-generating ability. PFI has increased its DPS from NZ$0.071 to NZ$0.075 in the past 10 years. It has also been paying out dividend consistently during this time, as you’d expect for a company increasing its dividend levels. These are all positive signs of a great, reliable dividend stock. Compared to its peers, Property For Industry produces a yield of 4.38%, which is on the low-side for REITs stocks.
Keeping in mind the dividend characteristics above, Property For Industry is definitely worth considering for investors looking to build a dedicated income portfolio. Given that this is purely a dividend analysis, you should always research extensively before deciding whether or not a stock is an appropriate investment for you. I always recommend analysing the company’s fundamentals and underlying business before making an investment decision. Below, I’ve compiled three key factors you should further examine:
- Future Outlook: What are well-informed industry analysts predicting for PFI’s future growth? Take a look at our free research report of analyst consensus for PFI’s outlook.
- Valuation: What is PFI 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 PFI is currently mispriced by the market.
- Other Dividend Rockstars: Are there better dividend payers with stronger fundamentals out there? Check out our free list of these great stocks here.