Is Buying Mirvac Group (ASX:MGR) For Its Upcoming AU$0.06 Dividend A Good Choice?

Have you been keeping an eye on Mirvac Group’s (ASX:MGR) upcoming dividend of AU$0.06 per share payable on the 31 August 2018? Then you only have 2 days left before the stock starts trading ex-dividend on the 28 June 2018. Is this future income stream a compelling catalyst for dividend investors to think about the stock as an investment today? Let’s take a look at Mirvac Group’s most recent financial data to examine its dividend characteristics in more detail. See our latest analysis for Mirvac Group

How I analyze a dividend stock

When assessing a stock as a potential addition to my dividend Portfolio, I look at these five areas:

• Is it paying an annual yield above 75% of dividend payers?

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

• Has dividend per share risen in the past couple of years?

• Does earnings amply cover its dividend payments?

• Will the company be able to keep paying dividend based on the future earnings growth?

ASX:MGR Historical Dividend Yield June 25th 18

Does Mirvac Group pass our checks?

The current trailing twelve-month payout ratio for the stock is 34.70%, 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 70.41%, leading to a dividend yield of around 5.09%. However, EPS is forecasted to fall to A$0.18 in the upcoming year. Therefore, although payout is expected to increase, the fall in earnings may not equate to higher dividend income.

If there’s one type of stock you want to be reliable, it’s dividend stocks and their stable income-generating ability. Dividend payments from Mirvac Group have been volatile in the past 10 years, with some years experiencing significant drops of over 25%. This means that dividend hunters should probably steer clear of the stock, at least for now until the track record improves.

Compared to its peers, Mirvac Group produces a yield of 4.62%, which is on the low-side for REITs stocks.

Next Steps:

Taking all the above into account, Mirvac Group is a complicated pick for dividend investors given that there are a couple of positive things about it as well as negative. But if you are not exclusively a dividend investor, the stock could still be an interesting investment opportunity. Given that this is purely a dividend analysis, I recommend taking sufficient time to understand its core business and determine whether the company and its investment properties suit your overall goals. Below, I’ve compiled three relevant aspects you should further examine:

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

2. Valuation: What is MGR 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 MGR 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.