Insights into CubeSmart (CUBE, Financial)'s Dividend History, Growth, and Future Prospects
CubeSmart (CUBE) recently announced a dividend of $0.49 per share, payable on 2023-10-16, with the ex-dividend date set for 2023-09-29. 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 deep dive into CubeSmarts dividend performance and assess its sustainability.
Understanding CubeSmart's Business
CubeSmart is a real estate investment trust that acquires, owns, and manages self-storage facilities throughout the United States. The company's real estate portfolio is composed of buildings with numerous enclosed storage areas for both residential and commercial customers to rent mainly on a month-by-month basis. Most of CubeSmart's facilities are located in Florida, Texas, California, New York, and Illinois. Cumulatively, these states account for both the majority of the square footage in the company's real estate portfolio and the majority of its revenue. CubeSmart derives nearly all of its revenue from rental income from tenants utilizing its storage facilities.
A Look at CubeSmart's Dividend History
CubeSmart has maintained a consistent dividend payment record since 2005. Dividends are currently distributed on a quarterly basis. CubeSmart has increased its dividend each year since 2009. The stock is thus listed as a dividend achiever, an honor that is given to companies that have increased their dividend each year for at least the past 14 years.
Below is a chart showing annual Dividends Per Share for tracking historical trends.
Decoding CubeSmart's Dividend Yield and Growth
As of today, CubeSmart currently has a 12-month trailing dividend yield of 4.94% and a 12-month forward dividend yield of 5.09%. This suggests an expectation of increased dividend payments over the next 12 months.
Over the past three years, CubeSmart's annual dividend growth rate was 11.30%. Extended to a five-year horizon, this rate decreased to 8.70% per year. And over the past decade, CubeSmart's annual dividends per share growth rate stands at an impressive 16.60%.
Based on CubeSmart's dividend yield and five-year growth rate, the 5-year yield on cost of CubeSmart stock as of today is approximately 7.50%.
Is CubeSmart's Dividend Sustainable?
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 2023-06-30, CubeSmart's dividend payout ratio is 1.10. And this may suggest that the company's dividend may not be sustainable.
CubeSmart's profitability rank, offers an understanding of the company's earnings prowess relative to its peers. GuruFocus ranks CubeSmart's profitability 9 out of 10 as of 2023-06-30, suggesting good profitability prospects. The company has reported positive net income for each of year over the past decade, further solidifying its high profitability.
Growth Metrics: The Future Outlook
To ensure the sustainability of dividends, a company must have robust growth metrics. CubeSmart's growth rank of 9 out of 10 suggests that the company's growth trajectory is good relative to its competitors.
Revenue is the lifeblood of any company, and CubeSmart's revenue per share, combined with the 3-year revenue growth rate, indicates a strong revenue model. CubeSmart's revenue has increased by approximately 10.00% per year on average, a rate that outperforms than approximately 82.7% 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, CubeSmart's earnings increased by approximately 13.60% per year on average, a rate that outperforms than approximately 65.36% of global competitors.
Lastly, the company's 5-year EBITDA growth rate of 10.20%, which outperforms than approximately 66.78% of global competitors.
Conclusion
Despite a high payout ratio, CubeSmart's impressive dividend growth rate, robust profitability, and strong growth metrics paint a promising picture for the company's dividend sustainability. However, investors should monitor the company's payout ratio and profitability closely. CubeSmart's consistent dividend growth, combined with its strong growth prospects, make it a compelling consideration for dividend-focused investors.
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