Dividends play a key role in compounding returns over time and can form a large part of our portfolio return. In the past 10 years Blackstone Mortgage Trust Inc (NYSE:BXMT) has returned an average of 8.00% per year to investors in the form of dividend payouts. Let’s dig deeper into whether Blackstone Mortgage Trust should have a place in your portfolio. View out our latest analysis for Blackstone Mortgage Trust
How I analyze a dividend stock
Whenever I am looking at a potential dividend stock investment, I always check these five metrics:
- Is its annual yield among the top 25% of dividend-paying companies?
- Has it consistently paid a stable dividend without missing a payment or drastically cutting payout?
- Has dividend per share risen in the past couple of years?
- Is its earnings sufficient to payout dividend at the current rate?
- Based on future earnings growth, will it be able to continue to payout dividend at the current rate?
How well does Blackstone Mortgage 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. Blackstone Mortgage Trust has a trailing twelve-month payout ratio of 108.41%, meaning that a portion of dividend payments are funded by retained earnings. In the near future, analysts are predicting a more sensible payout ratio of 91.80%, leading to a dividend yield of 7.93%. Furthermore, EPS should increase to $2.39, meaning that the lower payout ratio does not necessarily implicate a lower dividend payment. Reliablity is an important factor for dividend stocks, particularly for income investors who want a strong track record of payment and a positive outlook for future payout. Dividend payments from Blackstone Mortgage Trust have been volatile in the past 10 years, with some years experiencing significant drops of over 25%. These characteristics do not bode well for income investors seeking reliable stream of dividends. Relative to peers, Blackstone Mortgage Trust has a yield of 7.84%, which is on the low-side for Mortgage REITs stocks.
After digging a little deeper into Blackstone Mortgage 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, 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 important aspects you should further research:
- Future Outlook: What are well-informed industry analysts predicting for BXMT’s future growth? Take a look at our free research report of analyst consensus for BXMT’s outlook.
- Valuation: What is BXMT 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 BXMT 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.