Assessing the Sustainability of Upcoming Dividends
CapitaLand India Trust (ACNDF, Financial) recently announced a dividend of $0.03 per share, payable on 2024-02-28, with the ex-dividend date set for 2024-02-20. As investors look forward to this upcoming payment, the spotlight also shines on the company's dividend history, yield, and growth rates. Using the data from GuruFocus, let's look into CapitaLand India Trust's dividend performance and assess its sustainability.
What Does CapitaLand India Trust Do?
CapitaLand India Trust is a Singapore-listed property trust that obtains portfolio returns for unitholders by investing in information technology, or IT, parks, and office properties in major Indian cities. Group revenue is derived primarily from corporate tenants. The company focuses on the purchase and development of properties to be used primarily for business space. A-iTrust may also purchase, hold and develop land or uncompleted developments to be used for business space to hold the properties upon completion. A-iTrust is positioned to capitalize on the IT and business process management industries in India.
A Glimpse at CapitaLand India Trust's Dividend History
CapitaLand India Trust has maintained a consistent dividend payment record since 2010. Dividends are currently distributed on a bi-annual basis. Below is a chart showing annual Dividends Per Share for tracking historical trends.
Breaking Down CapitaLand India Trust's Dividend Yield and Growth
As of today, CapitaLand India Trust currently has a 12-month trailing dividend yield of 6.33% and a 12-month forward dividend yield of 5.41%. This suggests an expectation of decreased dividend payments over the next 12 months. Over the past three years, CapitaLand India Trust's annual dividend growth rate was 21.00%. Extended to a five-year horizon, this rate decreased to 6.10% per year. And over the past decade, CapitaLand India Trust's annual dividends per share growth rate stands at 4.20%.
Based on CapitaLand India Trust's dividend yield and five-year growth rate, the 5-year yield on cost of CapitaLand India Trust stock as of today is approximately 8.51%.
The Sustainability Question: Payout Ratio and Profitability
To assess the sustainability of the dividend, one needs to evaluate the company's payout ratio. The dividend payout ratio provides insights into the portion of earnings the company distributes as dividends. A lower ratio suggests that the company retains a significant part of its earnings, thereby ensuring the availability of funds for future growth and unexpected downturns. As of 2023-06-30, CapitaLand India Trust's dividend payout ratio is 0.84. And this may suggest that the company's dividend may not be sustainable.
CapitaLand India Trust's profitability rank, offers an understanding of the company's earnings prowess relative to its peers. GuruFocus ranks CapitaLand India Trust's profitability 7 out of 10 as of 2023-06-30, suggesting good profitability prospects. The company has reported positive net income for each of year over the past decade, further solidifying its high profitability.
Growth Metrics: The Future Outlook
To ensure the sustainability of dividends, a company must have robust growth metrics. CapitaLand India Trust's growth rank of 7 out of 10 suggests that the company's growth trajectory is good relative to its competitors. Revenue is the lifeblood of any company, and CapitaLand India Trust's revenue per share, combined with the 3-year revenue growth rate, indicates a strong revenue model. CapitaLand India Trust's revenue has increased by approximately 1.10% per year on average, a rate that underperforms than approximately 54.43% of global competitors.
The company's 3-year EPS growth rate showcases its capability to grow its earnings, a critical component for sustaining dividends in the long run. During the past three years, CapitaLand India Trust's earnings increased by approximately -17.50% per year on average, a rate that underperforms than approximately 74.36% of global competitors.
Lastly, the company's 5-year EBITDA growth rate of -8.20%, which underperforms than approximately 73.52% of global competitors.
Next Steps
Investors considering CapitaLand India Trust must weigh the enticing dividend yield against the backdrop of the company's payout ratio, profitability, and growth metrics. While the dividend history is consistent, the sustainability of future dividends could be challenged by the payout ratio and the mixed growth indicators. Value investors should monitor CapitaLand India Trust's financial health and market position closely, considering the broader economic environment and sector-specific trends that may impact its performance. With the right due diligence, investors can determine if CapitaLand India Trust aligns with their investment strategy and income objectives. GuruFocus Premium users can screen for high-dividend yield stocks using the High Dividend Yield Screener.
This article, generated by GuruFocus, is designed to provide general insights and is not tailored financial advice. Our commentary is rooted in historical data and analyst projections, utilizing an impartial methodology, and is not intended to serve as specific investment guidance. It does not formulate a recommendation to purchase or divest any stock and does not consider individual investment objectives or financial circumstances. Our objective is to deliver long-term, fundamental data-driven analysis. Be aware that our analysis might not incorporate the most recent, price-sensitive company announcements or qualitative information. GuruFocus holds no position in the stocks mentioned herein.
