NNN REIT Inc's Dividend Analysis
Assessing the Sustainability of NNN REIT Inc's Dividend Payments
NNN REIT Inc (NYSE:NNN) recently announced a dividend of $0.57 per share, payable on 2024-02-15, with the ex-dividend date set for 2024-01-30. As investors look forward to this upcoming payment, the spotlight also shines on the company's dividend history, yield, and growth rates. Using the data from GuruFocus, let's look into NNN REIT Inc's dividend performance and assess its sustainability.
What Does NNN REIT Inc Do?
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NNN REIT Inc is a real estate investment trust that invests in and develops properties throughout the United States. The company generates revenue from leasing properties to tenants, including convenience stores, automotive services, fitness centers, theatres, restaurants, and banks. Rents from convenience stores and restaurants contribute the majority proportion of total revenue, followed by automotive services, entertainment venues, and others. Most of the company's properties are located in the South and Southeast of the United States.
A Glimpse at NNN REIT Inc's Dividend History
NNN REIT Inc has maintained a consistent dividend payment record since 1985. Dividends are currently distributed on a quarterly basis. NNN REIT Inc has increased its dividend each year since 1988. The stock is thus listed as a dividend aristocrat, an honor that is given to companies that have increased their dividend each year for at least the past 36 years. Below is a chart showing annual Dividends Per Share for tracking historical trends.
Breaking Down NNN REIT Inc's Dividend Yield and Growth
As of today, NNN REIT Inc currently has a 12-month trailing dividend yield of 5.42% and a 12-month forward dividend yield of 5.46%. This suggests an expectation of increased dividend payments over the next 12 months.
Over the past three years, NNN REIT Inc's annual dividend growth rate was 2.10%. Extended to a five-year horizon, this rate increased to 2.90% per year. And over the past decade, NNN REIT Inc's annual dividends per share growth rate stands at 3.50%. Based on NNN REIT Inc's dividend yield and five-year growth rate, the 5-year yield on cost of NNN REIT Inc stock as of today is approximately 6.25%.
The Sustainability Question: Payout Ratio and Profitability
To assess the sustainability of the dividend, one needs to evaluate the company's payout ratio. The dividend payout ratio provides insights into the portion of earnings the company distributes as dividends. A lower ratio suggests that the company retains a significant part of its earnings, thereby ensuring the availability of funds for future growth and unexpected downturns. As of 2023-09-30, NNN REIT Inc's dividend payout ratio is 1.04, which may suggest that the company's dividend may not be sustainable.