Dividends play an important role in compounding returns in the long run and end up forming a sizeable part of investment returns. Suntec Real Estate Investment Trust (SGX:T82U) has returned to shareholders over the past 10 years, an average dividend yield of 8.00% annually. Should it have a place in your portfolio? Let’s take a look at Suntec Real Estate Investment Trust in more detail. See our latest analysis for Suntec Real Estate Investment Trust
How I analyze a dividend stock
If you are a dividend investor, you should always assess these five key metrics:
- Is it the top 25% annual dividend yield payer?
- Does it consistently pay out dividends without missing a payment of significantly cutting payout?
- Has dividend per share amount increased over the past?
- Is is able to pay the current rate of dividends from its earnings?
- Will it be able to continue to payout at the current rate in the future?
Does Suntec Real Estate Investment Trust pass our checks?
REITs are a special-case dividend payer. This is because a high percentage of their earnings are required to be paid out as dividends. Suntec Real Estate Investment Trust has a trailing twelve-month payout ratio of 112.73%, meaning that a portion of dividend payments are funded by retained earnings. In the near future, analysts are predicting a higher payout ratio of 127.92%, leading to a dividend yield of 5.89%. However, EPS is forecasted to fall to SGD0.075 in the upcoming year. Therefore, although payout is expected to increase, the fall in earnings may not equate to higher dividend income.
If there’s one type of stock you want to be reliable, it’s dividend stocks and their stable income-generating ability. T82U investors will be well aware there has not been any increase in the dividend payments over the last 10 years, although the payments have at least been steady. However, income investors that value stability over growth may still find T82U appealing.Relative to peers, Suntec Real Estate Investment Trust generates a yield of 5.85%, which is on the low-side for REITs stocks.
After digging a little deeper into Suntec Real Estate Investment Trust’s yield, it’s easy to see why you should be cautious investing in the company just for the dividend. On the other hand, if you are not strictly just a dividend investor, the stock could still be offering some interesting investment opportunities. 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 relevant factors you should further research:
- Future Outlook: What are well-informed industry analysts predicting for T82U’s future growth? Take a look at our free research report of analyst consensus for T82U’s outlook.
- Valuation: What is T82U 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 T82U 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.