Only Three Days Left To Cash In On New England Realty Associates Limited Partnership's (NYSEMKT:NEN) Dividend

Some investors rely on dividends for growing their wealth, and if you're one of those dividend sleuths, you might be intrigued to know that New England Realty Associates Limited Partnership (NYSEMKT:NEN) is about to go ex-dividend in just 3 days. Ex-dividend means that investors that purchase the stock on or after the 21st of December will not receive this dividend, which will be paid on the 31st of December.

New England Realty Associates Limited Partnership's upcoming dividend is US$0.32 a share, following on from the last 12 months, when the company distributed a total of US$1.28 per share to shareholders. Last year's total dividend payments show that New England Realty Associates Limited Partnership has a trailing yield of 2.6% on the current share price of $49.9. If you buy this business for its dividend, you should have an idea of whether New England Realty Associates Limited Partnership's dividend is reliable and sustainable. So we need to check whether the dividend payments are covered, and if earnings are growing.

See our latest analysis for New England Realty Associates Limited Partnership

Dividends are typically paid from company earnings. If a company pays more in dividends than it earned in profit, then the dividend could be unsustainable. New England Realty Associates Limited Partnership paid out 109% of its earnings, which is more than we're comfortable with, unless there are mitigating circumstances. A useful secondary check can be to evaluate whether New England Realty Associates Limited Partnership generated enough free cash flow to afford its dividend. It paid out 23% of its free cash flow as dividends last year, which is conservatively low.

It's disappointing to see that the dividend was not covered by profits, but cash is more important from a dividend sustainability perspective, and New England Realty Associates Limited Partnership fortunately did generate enough cash to fund its dividend. Still, if the company repeatedly paid a dividend greater than its profits, we'd be concerned. Very few companies are able to sustainably pay dividends larger than their reported earnings.

Click here to see how much of its profit New England Realty Associates Limited Partnership paid out over the last 12 months.

Have Earnings And Dividends Been Growing?

Companies with consistently growing earnings per share generally make the best dividend stocks, as they usually find it easier to grow dividends per share. If business enters a downturn and the dividend is cut, the company could see its value fall precipitously. That's why it's comforting to see New England Realty Associates Limited Partnership's earnings have been skyrocketing, up 35% per annum for the past five years.

Another key way to measure a company's dividend prospects is by measuring its historical rate of dividend growth. Since the start of our data, 10 years ago, New England Realty Associates Limited Partnership has lifted its dividend by approximately 3.2% a year on average. Earnings per share have been growing much quicker than dividends, potentially because New England Realty Associates Limited Partnership is keeping back more of its profits to grow the business.

To Sum It Up

Is New England Realty Associates Limited Partnership an attractive dividend stock, or better left on the shelf? Earnings per share have been rising nicely although, even though its cashflow payout ratio is low, we question why New England Realty Associates Limited Partnership is paying out so much of its profit. Overall, it's not a bad combination, but we feel that there are likely more attractive dividend prospects out there.

With that in mind, a critical part of thorough stock research is being aware of any risks that stock currently faces. To help with this, we've discovered 3 warning signs for New England Realty Associates Limited Partnership (1 makes us a bit uncomfortable!) that you ought to be aware of before buying the shares.

If you're in the market for dividend stocks, we recommend checking our list of top dividend stocks with a greater than 2% yield and an upcoming dividend.

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This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
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