Today, let’s take a look at a real estate investment trust (REIT) on the FTSE 250 that offers a high dividend yield and has shown recent strong performance. But is it a good long-term income stock?
REITs are known for paying out at least 90% of their profits as dividends, making them a reliable choice for income investors. However, they are heavily influenced by the housing market’s performance, posing a risk if the economy falters and earnings decline.
One such REIT to consider is Assura (LSE: AGR), which specializes in healthcare premises. While the stock had a rough start to the year with a 12% drop, it has recently rebounded by 5.2% and boasts an attractive 7.8% dividend yield. But is it worth investing in?
Assura’s dividend track record has been a mixed bag, with payments being suspended and cut in the past. However, over the last decade, dividend payments have been consistent and steadily increasing, showing promise for shareholders.
When assessing a stock for dividends, it’s crucial to check the company’s debt management, income statement, and valuation. Assura’s debt-to-equity ratio is acceptable at 84.6%, but nearing 100% would be concerning. While revenue exceeded expectations, earnings per share fell to a loss, which could impact dividend sustainability. The stock’s price-to-sales ratio is high at 8, but analysts believe it is undervalued by 21.6%.
In conclusion, Assura may not see significant price growth in the short term, but its dividends are expected to remain stable. For investors looking to add real estate exposure to their portfolio, Assura could be a good choice. However, for those cautious about the housing market, it may not be the right time to buy.
Overall, it’s essential to consider a diverse range of insights before making investment decisions. Investing in stocks like Assura can offer potential rewards but also come with risks, especially in uncertain economic times.