When trying to find dividend shares, it’s vital to strike a steadiness between a juicy yield and the sustainability of earnings funds. It may be tough to match the 2, as a really excessive dividend yield will be as a result of a falling share price. Nevertheless, some choices have a beneficiant dividend forecast whereas nonetheless having a powerful observe file of funds. Right here’s one for consideration.

The corporate in focus

I’m speaking in regards to the Grocery store Earnings REIT (LSE:SUPR). Because the identify suggests, it’s an actual property funding belief (REIT) based mostly within the UK that focuses on investing in grocery store properties.

Over the previous yr, the inventory has elevated a powerful 16%, with a present dividend yield of seven.24%. The truth that the inventory is up and the yield continues to be excessive is a powerful signal. If the dividend per share stays the identical and the inventory rises, this reduces the yield. It’s true that the yield has fallen modestly in current months, however earnings traders will level out that in recent times, the dividend per share has been hiked.

It’s a beautiful dividend choice as a result of it has a comparatively secure money move. It makes cash from rental earnings from leasing the grocery store buildings to tenants. These are often giant chains, so the danger of default is kind of low. In principle, over time, the corporate can even profit from property worth appreciation.

Please word that tax remedy relies on the person circumstances of every consumer and could also be topic to alter in future. The content material on this article is supplied for info functions solely. It’s not supposed to be, neither does it represent, any type of tax recommendation.

Dividend particulars

Usually, the REIT pays out quarterly dividends. Over the previous yr, this has totalled 6.11p. Wanting forward, the dividend is forecast to extend to six.26p for the total yr 2026, with it doubtlessly rising to six.36p in 2027. If I assume the share price stays the identical, this may equate to a yield of seven.6% in 2027.

Some would possibly have a look at the forecast and never be overly impressed. In any case, it’s solely a modest improve from the present yield. But a couple of factors must be remembered. The share price projection is only a forecast. The precise share price sooner or later may be increased or decrease than proper now, which might improve or lower the longer term yield.

One other issue is the reliability. The REIT has a powerful observe file in recent times of paying out quarterly dividends. Primarily based on the most recent outcomes and dividend cowl, I don’t see this altering. After all, nothing is assured, however to have the ability to doubtlessly obtain a yield in extra of seven% with comparatively low threat of dividend cuts is kind of interesting.

One concern is that the property values might fall as a result of weaker sentiment or different market situations. Provided that the share price ought to carefully observe the online asset worth of the portfolio, it is a threat.

General, I feel the inventory affords a beneficiant yield with a sustainable forecast, so could possibly be one thing for traders to contemplate.