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Like Dividends? Why Mapletree Industrial Trust is an Excellent Income Share

Mapletree Industrial Trust (SGX: ME8U), or MIT, is one of the biggest industrial real estate investment trusts (REITs) listed in Singapore. It has 87 industrial properties and 14 data centres in the US (through its 40% joint venture).

I generally look at investments in three buckets – growth, value, and income/dividend since investors will have different preferences and styles.

In this article, I’ll look at two reasons why MIT might be of interest to one of these groups of investors, namely dividend investors.

Solid financial track record

One important factor that dividend investors should focus on in assessing a dividend company is how well its underlying business has performed in the past few years.

A good track record will provide assurance to dividend investors that the company will likely sustain its business performance and, subsequently, its dividend payments for the foreseeable future.

As for MIT, it has a pretty solid track record over the past few years. Since its IPO, MIT has grown its gross revenue from S$246.4 million in FY11/12 to S$376.1 million in FY18/19. Similarly, its distributable income grew from S$131.7 million to S$231.8 million during the period. Both revenue and distribution income grew at a compound average growth rate (CAGR) of 6.2% and 8.4%, respectively, during that period.

Personally, such performance is enviable, more so when we consider that MIT is a REIT. And this brings us to the next important reason for dividend investors to like it.

Growing dividend

One of the key criteria that dividend investors look for when investing is the track record of the dividend payment. The key here is to look for stable, or even better, increasing dividend payments over the years.

In the case of MIT, it has grown its distribution per unit (DPU) from 8.41 cents in FY11/12 to 12.16 cents in FY18/19. In other words, its dividend was up by 45% during the period!

It’s here where I need to remind investors that past performance is no guarantee of future results. Yet, as long as MIT can continue to grow its profitability in future, investors will enjoy higher dividends since MIT will be paying the majority of its profits as dividends.

Conclusion

In sum, dividend investors might want to give MIT a closer look given its strong financial and dividend track records.

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The information provided is for general information purposes only and is not intended to be personalised investment or financial advice. Motley Fool Singapore contributor Lawrence Nga doesn’t own shares in any companies mentioned. The Motley Fool Singapore has recommended shares of Mapletree Industrial Trust.