Should Income Investors Look At Marwest Apartment Real Estate Investment Trust (CVE:MAR.UN)

Marwest Apartment Real Estate Investment Trust (CVE:MAR.UN) is about to trade ex-dividend in the next four days. The ex-dividend date occurs one day before the record date which is the day on which shareholders need to be on the company’s books in order to receive a dividend. The ex-dividend date is an important date to be aware of as any purchase of the stock made on or after this date might mean a late settlement that doesn’t show on the record date. Accordingly, Marwest Apartment Real Estate Investment Trust investors that purchase the stock on or after the 29th of November will not receive the dividend, which will be paid on the 15th of December.

The company’s next dividend payment will be CA$0.0013 per share. Last year, in total, the company distributed CA$0.015 to shareholders. Last year’s total dividend payments show that Marwest Apartment Real Estate Investment Trust has a trailing yield of 2.2% on the current share price of CA$0.71. Dividends are a major contributor to investment returns for long term holders, but only if the dividend continues to be paid. So we need to check whether the dividend payments are covered, and if earnings are growing.

See our latest analysis for Marwest Apartment Real Estate Investment Trust

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. Marwest Apartment Real Estate Investment Trust paid out just 4.0% of its profit last year, which we think is conservatively low and leaves plenty of margin for unexpected circumstances.

Generally speaking, the lower a company’s payout ratios, the more resilient its dividend usually is.

Click here to see how much of its profit Marwest Apartment Real Estate Investment Trust paid out over the last 12 months.

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Have Earnings And Dividends Been Growing?

When earnings decline, dividend companies become much harder to analyse and own safely. If business enters a downturn and the dividend is cut, the company could see its value fall precipitously. From this perspective, we’re disturbed to see earnings per share plunged 54% over the last 12 months, and we’d wonder if the company has had some kind of major event that has skewed the calculation.

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Another key way to measure a company’s dividend prospects is by measuring its historical rate of dividend growth. In the past two years, Marwest Apartment Real Estate Investment Trust has increased its dividend at approximately 1.0% a year on average.

To Sum It Up

From a dividend perspective, should investors buy or avoid Marwest Apartment Real Estate Investment Trust? Marwest Apartment Real Estate Investment Trust’s earnings per share are down sharply over the last year, although we note that it is paying out a low fraction of its earnings. From a dividend perspective we struggle to see value in a company with declining earnings per share, but it’s also true that a one-year decline often doesn’t mean much. So we wouldn’t be too quick to write this one off. It might be worth researching if the company is reinvesting in growth projects that could grow earnings and dividends in the future, but for now we’re on the fence about its dividend prospects.

With that being said, if dividends aren’t your biggest concern with Marwest Apartment Real Estate Investment Trust, you should know about the other risks facing this business. To that end, you should learn about the 4 warning signs we’ve spotted with Marwest Apartment Real Estate Investment Trust (including 1 which makes us a bit uncomfortable).

Generally, we wouldn’t recommend just buying the first dividend stock you see. Here’s a curated list of interesting stocks that are strong dividend payers.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. 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.