Should Income Investors Look At Marwest Apartment Real Estate Investment Trust (CVE:MAR.UN) Before Its Ex-Dividend?

Regular readers will know that we love our dividends at Simply Wall St, which is why it’s exciting to see Marwest Apartment Real Estate Investment Trust (CVE:MAR.UN) is about to trade ex-dividend in the next 4 days. Typically, the ex-dividend date is one business day before the record date, which is the date on which a company determines the shareholders eligible to receive a dividend. The ex-dividend date is important because any transaction on a stock needs to have been settled before the record date in order to be eligible for a dividend. Accordingly, Marwest Apartment Real Estate Investment Trust investors that purchase the stock on or after the 29th of May will not receive the dividend, which will be paid on the 15th of June.

The company’s upcoming dividend is CA$0.001425 a share, following on from the last 12 months, when the company distributed a total of CA$0.017 per share 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$0.79. 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 investigate whether Marwest Apartment Real Estate Investment Trust can afford its dividend, and if the dividend could grow.

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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 has a low and conservative payout ratio of just 18% of its income after tax.

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

See our latest analysis for Marwest Apartment Real Estate Investment Trust

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

Have Earnings And Dividends Been Growing?

When earnings decline, dividend companies become much harder to analyse and own safely. Investors love dividends, so if earnings fall and the dividend is reduced, expect a stock to be sold off heavily at the same time. With that in mind, we’re discomforted by Marwest Apartment Real Estate Investment Trust’s 24% per annum decline in earnings in the past five years. When earnings per share fall, the maximum amount of dividends that can be paid also falls.

Another key way to measure a company’s dividend prospects is by measuring its historical rate of dividend growth. In the past four years, Marwest Apartment Real Estate Investment Trust has increased its dividend at approximately 3.3% a year on average.

Final Takeaway

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 over the past five years, although it has the cushion of a low payout ratio, which would suggest a cut to the dividend is relatively unlikely. In sum this is a middling combination, and we find it hard to get excited about the company from a dividend perspective.

If you’re not too concerned about Marwest Apartment Real Estate Investment Trust’s ability to pay dividends, you should still be mindful of some of the other risks that this business faces. For instance, we’ve identified 4 warning signs for Marwest Apartment Real Estate Investment Trust (2 are a bit concerning) you should be aware of.

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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.