Does Goodman Group (ASX:GMG) Have A Place In Your Portfolio?

Dividends play an important role in compounding returns in the long run and end up forming a sizeable part of investment returns. Goodman Group (ASX:GMG) has returned to shareholders over the past 10 years, an average dividend yield of 8.00% annually. Should it have a place in your portfolio? Let’s take a look at Goodman Group in more detail. See our latest analysis for Goodman Group

5 questions to ask before buying a dividend stock

If you are a dividend investor, you should always assess these five key metrics:

• Is its annual yield among the top 25% of dividend-paying companies?

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

• Has the amount of dividend per share grown over the past?

• Can it afford to pay the current rate of dividends from its earnings?

• Will it be able to continue to payout at the current rate in the future?

ASX:GMG Historical Dividend Yield June 25th 18

How well does Goodman Group fit our criteria?

The current trailing twelve-month payout ratio for the stock is 63.25%, 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. Going forward, analysts expect GMG’s payout to remain around the same level at 59.98% of its earnings, which leads to a dividend yield of around 3.05%. In addition to this, EPS should increase to A$0.50.

If there’s one type of stock you want to be reliable, it’s dividend stocks and their stable income-generating ability. Not only have dividend payouts from Goodman Group fallen over the past 10 years, it has also been highly volatile during this time, with drops of over 25% in some years. 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, Goodman Group generates a yield of 2.79%, which is on the low-side for REITs stocks.

Next Steps:

If Goodman Group is in your portfolio for cash-generating reasons, there may be better alternatives out there. However, if you are not strictly just a dividend investor, the stock could still offer some interesting investment opportunities. 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 research:

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

2. Valuation: What is GMG 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 GMG 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.