Is Mapletree Industrial Trust (SGX:ME8U) An Attractive Dividend Stock?

Dividends play an important role in compounding returns in the long run and end up forming a sizeable part of investment returns. Over the past 7 years, Mapletree Industrial Trust (SGX:ME8U) has returned an average of 7.00% per year to shareholders in terms of dividend yield. Should it have a place in your portfolio? Let’s take a look at Mapletree Industrial Trust in more detail. See our latest analysis for Mapletree Industrial Trust

5 questions to ask before buying 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?

• Has it paid dividend every year without dramatically reducing payout in the past?

• Has the amount of dividend per share grown over the past?

• Does earnings amply cover its dividend payments?

• Will it be able to continue to payout at the current rate in the future?

SGX:ME8U Historical Dividend Yield Jun 6th 18

How well does Mapletree Industrial Trust fit our criteria?

The current trailing twelve-month payout ratio for the stock is 71.80%, 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. In the near future, analysts are predicting a higher payout ratio of 100.67%, leading to a dividend yield of 6.44%. However, EPS is forecasted to fall to SGD0.13 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 is one thing that you want to be reliable in your life, it’s dividend stocks and their constant income stream. Unfortunately, it is really too early to view Mapletree Industrial Trust as a dividend investment. It has only been consistently paying dividends for 7 years, however, standard practice for reliable payers is to look for a 10-year minimum track record. In terms of its peers, Mapletree Industrial Trust generates a yield of 5.91%, which is on the low-side for REITs stocks.

Next Steps:

Taking all the above into account, Mapletree Industrial Trust is a complicated pick for dividend investors given that there are a couple of positive things about it as well as negative. However, if you are not strictly just a dividend investor, the stock could still offer some interesting investment opportunities. Given that this is purely a dividend analysis, I urge potential investors to try and get a good understanding of the underlying business and its fundamentals before deciding on an investment. Below, I’ve compiled three relevant aspects you should look at:

1. Future Outlook: What are well-informed industry analysts predicting for ME8U’s future growth? Take a look at our free research report of analyst consensus for ME8U’s outlook.

2. Valuation: What is ME8U 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 ME8U is currently mispriced by the market.

3. Dividend Rockstars: Are there better dividend payers with stronger fundamentals out there? Check out our free list of these great stocks here.

To help readers see pass the short term volatility of the financial market, we aim to bring you a long-term focused research analysis purely driven by fundamental data. Note that our analysis does not factor in the latest price sensitive company announcements.

The author is an independent contributor and at the time of publication had no position in the stocks mentioned.