Understanding SEVN's Dividend Sustainability and Prospects
Seven Hills Realty Trust (SEVN, Financial) recently announced a dividend of $0.35 per share, payable on 2024-02-15, with the ex-dividend date set for 2024-01-19. 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 Seven Hills Realty Trusts dividend performance and assess its sustainability.
What Does Seven Hills Realty Trust Do?
Seven Hills Realty Trust, formerly RMR Mortgage Trust, is a real estate investment trust. The company is engaged in the business of originating and investing in first mortgage whole loans secured by middle market and transitional commercial real estate. Its non-fundamental primary objective is to balance capital preservation by generating risk-adjusted returns.
A Glimpse at Seven Hills Realty Trust's Dividend History
Seven Hills Realty Trust has maintained a consistent dividend payment record since 2017. Dividends are currently distributed on a quarterly basis. Below is a chart showing annual Dividends Per Share for tracking historical trends.
Breaking Down Seven Hills Realty Trust's Dividend Yield and Growth
As of today, Seven Hills Realty Trust currently has a 12-month trailing dividend yield of 10.13% and a 12-month forward dividend yield of 10.13%. This suggests an expectation of same dividend payments over the next 12 months.
Over the past three years, Seven Hills Realty Trust's annual dividend growth rate was -8.80%. Extended to a five-year horizon, this rate increased to 1.00% per year. Based on Seven Hills Realty Trust's dividend yield and five-year growth rate, the 5-year yield on cost of Seven Hills Realty Trust stock as of today is approximately 10.65%.
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, Seven Hills Realty Trust's dividend payout ratio is 0.72, which may suggest that the company's dividend may not be sustainable.
Seven Hills Realty Trust's profitability rank, offers an understanding of the company's earnings prowess relative to its peers. GuruFocus ranks Seven Hills Realty Trust's profitability 3 out of 10 as of 2023-09-30, suggesting the dividend may not be sustainable. The company has reported net profit in 7 years out of past 10 years.
Growth Metrics: The Future Outlook
To ensure the sustainability of dividends, a company must have robust growth metrics. Seven Hills Realty Trust's growth rank of 3 out of 10 suggests that the company has poor growth prospects and thus, the dividend may not be sustainable. Revenue is the lifeblood of any company, and Seven Hills Realty Trust's revenue per share, combined with the 3-year revenue growth rate, indicates a strong revenue model. Seven Hills Realty Trust's revenue has decreased by approximately -30.80% per year on average, a rate that underperforms approximately 95.3% of global competitors.
The company's 3-year EPS growth rate showcases its capability to grow its earnings, a critical component for sustaining dividends in the long run. During the past three years, Seven Hills Realty Trust's earnings decreased by approximately -35.00% per year on average, a rate that underperforms approximately 89.39% of global competitors.
Next Steps
Given Seven Hills Realty Trust's dividend payments, dividend growth rate, payout ratio, profitability, and growth metrics, investors should exercise caution. The high dividend yield may be attractive, but the negative growth rates and low profitability and growth rankings raise concerns about the long-term sustainability of these dividends. Investors should closely monitor the company's future earnings reports and strategic initiatives for signs of improvement. For those looking for stable and sustainable income, diversification and thorough research remain key. GuruFocus Premium users can screen for high-dividend yield stocks using the High Dividend Yield Screener.
This article, generated by GuruFocus, is designed to provide general insights and is not tailored financial advice. Our commentary is rooted in historical data and analyst projections, utilizing an impartial methodology, and is not intended to serve as specific investment guidance. It does not formulate a recommendation to purchase or divest any stock and does not consider individual investment objectives or financial circumstances. Our objective is to deliver long-term, fundamental data-driven analysis. Be aware that our analysis might not incorporate the most recent, price-sensitive company announcements or qualitative information. GuruFocus holds no position in the stocks mentioned herein.
