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 Cross Timbers Royalty Trust (NYSE:CRT) has returned an average of 8.00% per year to investors in the form of dividend payouts. Let’s dig deeper into whether Cross Timbers Royalty Trust should have a place in your portfolio. View our latest analysis for Cross Timbers Royalty Trust
5 checks you should do on a dividend stock
If you are a dividend investor, you should always assess these five key metrics:
- Is their annual yield among the top 25% of dividend payers?
- Has its dividend been stable over the past (i.e. no missed payments or significant payout cuts)?
- Has dividend per share amount increased over the past?
- Is is able 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 Cross Timbers Royalty Trust fit our criteria?Cross Timbers Royalty Trust has a trailing twelve-month payout ratio of 100.00%, which means that the dividend is not well-covered by its 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. Not only have dividend payouts from Cross Timbers Royalty Trust fallen over the past 10 years, it has also been highly volatile during this time, with drops of over 25% in some years. This means that dividend hunters should probably steer clear of the stock, at least for now until the track record improves. Compared to its peers, Cross Timbers Royalty Trust generates a yield of 7.65%, which is high for Oil and Gas stocks.
Now you know to keep in mind the reason why investors should be careful investing in Cross Timbers Royalty Trust 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. There are three key factors you should look at:
- Valuation: What is CRT 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 is currently mispriced by the market.
- Management Team: An experienced management team on the helm increases our confidence in the business – take a look at who sits on Cross Timbers Royalty Trust’s board and the CEO’s back ground.
- Dividend Rockstars: Are there better dividend payers with stronger fundamentals out there? Check out our free list of these great stocks here.