The S&P/ASX 200 Real Estate (Sector) was in the red zone post market close on 20 September 2019 as it settled at 3,737.2, down by 0.35% or 12.9 basis points relative to its last close. Amid the much-discussed property landscape of Australia, let us have a look at the recent developments (dividend distribution and on-boarding of personnel) of three real estate stocks, listed and trading on the ASX. Before this, we would acquaint ourselves with the executive knowledge about dividend.
Dividend and Its Importance
Best described as a token reward from a portion of a company’s earnings/profits, dividends refer to the payment made by a firm to its stakeholders. When profits are earned, a company becomes well-positioned to both re-invest the profit (retained earnings) in the business and pay a proportion to its stakeholders. The dividend amount and criterion are decided by the company’s Board of Directors and is approved by the stakeholders, through their voting rights and substantial holdings in the company.
The Board has the liberty to issue dividends over various time frame (monthly, quarterly or annually) and with different pay-out rates. In an ideal scenario, the well-established and giant players, with more predictable profits are the best dividend payers- typically from the oil & gas, financial, healthcare sectors, to name a few.
Dividends are important as they are a form of actual income for the shareholders, and the only actual return that investors receive when they buy a stock, providing them with a consistent realised income on a periodic basis. Moreover, dividends bear tax advantages and they allow the shareholders to purchase more shares.
Besides this, a company’s dividend paying capacity speaks volumes about its fundamentals and deciphers its financial well-being and shareholder value in the market. Dividends are a depiction of the future prospects and performance of the company.
Companies in Discussion
Dividend Distribution of Charter Hall Education Trust (ASX: CQE)
On 20 September 2019, CQE notified that in line with the 2020 full year distribution guidance of 16.7 cents per unit, Charter Hall Social Infrastructure Limited, the responsible entity of CQE, has given a notice regarding a 4.175 cpu distribution for the September 2019 quarter.
The Distribution Reinvestment Plan would be applicable to the announced distribution, along with a discount of 1.5% to the average of the daily volume weighted average market price (from 2 October 2019 through to 15 October 2019). The below timeline was laid down, pertaining to the distribution for the September 2019 quarter:
Dividend Distribution of Centuria Industrial REIT (ASX: CIP)
Joining the bandwagon alongside its industry peer CQE is CIP, whose responsible entity, Centuria Property Funds No. 2 Limited confirmed on 20 September 2019 that the dividend distribution for the quarter ending 30 September 2019 would be 4.675 cents per unit.
In this distribution, the company would exercise its Distribution Reinvestment Plan, and the units issued under the DRP would be priced based on the arithmetic average of the daily volume weighted average market price of all units sold in the ordinary course of trading on the ASX automated trading system during the 10 trading day period (from 3 October 2019) and a discount of 1 per cent would be considered. The key dates as notified are mentioned below:
Besides this, the company recently appointed Mr Jesse Curtis as Fund Manager of CIP (expected to commence his new duties on 14 October 2019), after the promotion of its present Fund Manager, Mr Ross Lees. Mr Lees has been promoted to the position of Head of Funds Management for managing the wider real estate platform of the company.
Dividend Distribution of Arena REIT (ASX: ARF)
Our third company under discussion, ARF, also announced a distribution for the quarter ending 30 September 2019 on 20 September 2019. The distribution of 3.575 cents per stapled security is in sync with the FY20 distribution guidance of 14.3 cents per security. Also, the company’s Dividend and Distribution Reinvestment Plan would be operational in respect of this distribution.
ARF notified that participating shareholders would be issued new securities priced at a 1.5% discount to the 10-day volume weighted average trading price during the pricing period. The key dates as notified are mentioned below:
Share Price Performance
The below table outlines the stock performance of the discussed companies, and their YTD returns, as per the ASX, after the market close on 20 September 2019:
Annual Dividend Yield
As we have discussed dividend distribution of the above-mentioned companies in this article, it would be interesting and vital to know their annual dividend yield (as on 20 September 2019).
The dividend yield is alternatively referred to as the dividend-price ratio of a share and is calculated by dividing the dividend per share by the price per share and is hence expressed as a percentage. Experts believe that the average dividend yield in the market is highest among real estate investment trusts (REITs).
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