Assessing the Upcoming Dividend Payment and Financial Health of CubeSmart
CubeSmart (CUBE, Financial) recently announced a dividend of $0.51 per share, payable on 2024-01-16, with the ex-dividend date set for 2023-12-29. 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 CubeSmart's dividend performance and assess its sustainability.
What Does CubeSmart Do?
CubeSmart is a real estate investment trust that acquires, owns, and manages self-storage facilities throughout the United States. The company's real estate portfolio is composed of buildings with numerous enclosed storage areas for both residential and commercial customers to rent mainly on a month-by-month basis. Most of CubeSmart's facilities are located in Florida, Texas, California, New York, and Illinois. Cumulatively, these states account for both the majority of the square footage in the company's real estate portfolio and the majority of its revenue. CubeSmart derives nearly all of its revenue from rental income from tenants utilizing its storage facilities.
A Glimpse at CubeSmart's Dividend History
CubeSmart has maintained a consistent dividend payment record since 2005, with dividends currently distributed on a quarterly basis. CubeSmart has increased its dividend each year since 2009, earning the status of a dividend achiever, a distinction awarded to companies with at least 14 consecutive years of dividend increases. Below is a chart showing annual Dividends Per Share to track historical trends.
Breaking Down CubeSmart's Dividend Yield and Growth
CubeSmart currently has a 12-month trailing dividend yield of 4.13% and a 12-month forward dividend yield of 4.30%, suggesting an expectation of increased dividend payments over the next 12 months. Over the past three years, CubeSmart's annual dividend growth rate was 11.30%. This rate decreased to 8.70% per year over a five-year horizon. However, over the past decade, CubeSmart's annual dividends per share growth rate has been an impressive 16.60%. Based on CubeSmart's dividend yield and five-year growth rate, the 5-year yield on cost of CubeSmart stock as of today is approximately 6.27%.
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. As of 2023-09-30, CubeSmart's dividend payout ratio is 1.17, which may suggest that the company's dividend may not be sustainable. However, CubeSmart's profitability rank of 9 out of 10, as of 2023-09-30, suggests good profitability prospects. The company has reported positive net income for each year over the past decade, further solidifying its high profitability.
Growth Metrics: The Future Outlook
CubeSmart's robust growth rank of 9 out of 10 suggests that the company's growth trajectory is strong relative to its competitors. CubeSmart's revenue per share and 3-year revenue growth rate indicate a strong revenue model, with an average annual increase of approximately 10.00%, outperforming about 81.4% of global competitors. The 3-year EPS growth rate demonstrates CubeSmart's ability to grow earnings by approximately 13.90% per year on average, outperforming about 70.09% of global competitors. Lastly, the company's 5-year EBITDA growth rate of 10.30% also outperforms about 74.79% of global competitors.
Next Steps
In conclusion, CubeSmart's forthcoming dividend payment, consistent dividend growth rate, and strong payout ratio reflect its commitment to rewarding shareholders. The company's robust profitability and growth metrics present a promising outlook for the sustainability of its dividends. However, investors should keep an eye on the payout ratio, as it may hint at future challenges in maintaining dividend levels. With a combination of a solid track record and promising growth prospects, CubeSmart remains an intriguing option for value investors seeking income-generating assets. Will CubeSmart continue to uphold its dividend achiever status in the years to come? Value investors may find it prudent to monitor CubeSmart's financial health and industry trends closely.
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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.
