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Scentre Group Dividend Update

Jordan Baird

Jordan Baird is the head ASR Wealth Advisers client services desk and has been with the organisation since 2017. He first started investing in his early years. While he believes that investors should leave no stone unturned he has a particular interest in trading based on broad macroeconomic trends along with specific analysis of innovative up-and-coming companies.

Scentre Group (ASX: SCG) announced a dividend of 11.30c/ share today, slightly above the two 11.08c/ share dividends last year. The share price was little changed on the news, with the slight uptick in dividend payouts broadly in line with investor expectations. As REITs pay out a large percentage of their income to obtain tax benefits of listing as a REIT, they typically attract dividend investors looking for yield. As such, the dividend payouts are sometimes a good indication of the earnings at a REIT is expected to generate, as dividend increases will commonly precede earnings increases if announced first.

Scentre Group SCG Dividend Update

Scentre Group is a REIT composed primarily of high-quality Westfield shopping centres. Following the spinoff of Westfield’s real estate into a separate listed entity, Scentre Group was the main real estate investment vehicle of the founding Lowy family. This is because they choose to concentrate on high quality, more premium shopping centres that are believed to be less sensitive to a decline in retail as consumers shift to online shopping. People have a greater preference for seeing luxury products before buying them, explaining continued demand for shops in Pitt St Mall, their signature retail centre.

Scentre Group has a long WALE for a retail REIT, meaning that most clients are relatively stable. It is however common for landlords to charge a certain percentage of revenue. This results in a portion of earnings being directly exposed to the economic cycle, given that the consumer discretionary sector is very cyclical. The company trades on a PE of 9.3 and has a trailing dividend yield of 5.53%, both of which are substantially below listed peers.

 


 

Disclaimer:

This article has been prepared by the Australian Stock Report Pty Ltd (AFSL: 301 682. ABN: 94 106 863 978) (“ASR”). ASR is part of Amalgamated Australian Investment Group Limited (AAIG) (ABN: 81 140 208 288 Level 13, 130 Pitt Street, Sydney NSW 2000).

This article is provided for informational purpose only and does not purport to contain all matters relevant to any particular investment or financial instrument. Any market commentary in this communication is not intended to constitute “research” as defined by applicable regulations. Whilst information published on or accessed via this website is believed to be reliable, as far as permitted by law we make no representations as to its ongoing availability, accuracy or completeness. Any quotes or prices used herein are current at the time of preparation. This document and its contents are proprietary information and products of our firm and may not be reproduced or otherwise disseminated in whole or in part without our written consent unless required to by judicial or administrative proceeding. The ultimate decision to proceed with any transaction rests solely with you. We are not acting as your advisor in relation to any information contained herein. Any projections are estimates only and may not be realised in the future.

ASR has no position in any of the stocks mentioned.

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