Marwest Apartment REIT: A Dividend Stock With Attractive Yield and Strong Earnings Growth

Marwest Apartment Real Estate Investment Trust (CVE:MAR.UN) has recently affirmed its monthly cash distribution of CA$0.0013 per share, payable on February 18, 2025. This announcement highlights the company's commitment to returning value to shareholders through consistent dividend payments. In this article, we will analyze Marwest Apartment REIT's dividend yield, sustainability, and risks to provide investors with a comprehensive understanding of the investment opportunity.

Dividend Yield and Historical Performance

Marwest Apartment REIT's current dividend yield is 2.31%, which is higher than the average yield of 2.3% for the industry. The company's highest dividend payout ratio was 0.07, with the lowest being 0. The median payout ratio was 0.03. The forward dividend yield is 2.33%. Marwest Apartment REIT has maintained a consistent dividend payout over the past three years, with a modest growth rate of approximately 1.3% per year.



Dividend Sustainability

Marwest Apartment REIT's dividend payout appears to be sustainable, given its earnings and cash flow trends. The company pays out a low percentage of its profit after tax as dividends, currently at 0.8%. This indicates that the dividend is well-covered by earnings and leaves room for potential growth or unexpected events. Marwest Apartment REIT has experienced significant earnings growth over the past year, with earnings per share increasing by 67%. This growth suggests that the company is generating sufficient cash flow to support its dividend payments and reinvest in the business.

Risks and Challenges

While Marwest Apartment REIT's dividend payout appears sustainable, there are several risks and challenges that could potentially impact its dividend payments in the future:

1. Interest Payments Not Well Covered by Earnings: The company's interest payments are not well covered by its earnings, which could lead to financial strain and potentially impact its ability to maintain or increase dividend payments.
2. Large One-off Items Impacting Financial Results: The presence of large one-off items affecting the company's financial results could lead to fluctuations in earnings and cash flow, making it difficult to maintain consistent dividend payments.
3. Market Cap Size: Marwest Apartment REIT has a relatively small market capitalization (CA$13M), which could make it more susceptible to market volatility and changes in investor sentiment. A decrease in the company's stock price could lead to a reduction in dividend payments or even a suspension of dividends.
4. Lack of New Directors: The company has insufficient new directors, which could lead to a lack of fresh perspectives and ideas, potentially hindering the company's ability to adapt to changing market conditions and maintain dividend payments.
5. Earnings Volatility: While Marwest Apartment REIT has experienced significant earnings growth (71.3% over the past year), the volatility in earnings could make it challenging to maintain consistent dividend payments in the future.
6. GuruFocus Warning Signs: GuruFocus detected 2 severe warning signs with MAR.UN, which could indicate potential issues with the company's financial health or business model that could impact its ability to maintain dividend payments.

Conclusion

Marwest Apartment Real Estate Investment Trust (CVE:MAR.UN) offers an attractive dividend yield of 2.31% and has demonstrated strong earnings growth. The company's dividend payout appears to be sustainable, given its earnings and cash flow trends. However, investors should be aware of the risks and challenges facing Marwest Apartment REIT, which could potentially impact its dividend payments in the future. By monitoring the company's financial performance and dividend policy closely, investors can make informed decisions about the suitability of Marwest Apartment REIT as an investment in their portfolios.