When trying to find dividend shares, it’s tempting to chase the best yields. However a beneficiant dividend means little if the corporate behind it’s financially stretched or working in a declining sector. What actually issues is a mix of yield, dividend progress, constant funds and robust fundamentals.

It’s additionally value remembering that dividends are by no means assured. If enterprise circumstances flip bitter, even probably the most established corporations can cut back or scrap their payouts altogether. That’s why its essential to do a full evaluation earlier than making any funding choices concerning dividends.

One FTSE 100 inventory that at the moment ticks lots of the correct containers for me is LondonMetric Property (LSE: LMP).

A quiet performer with a stable yield

Londonmetric’s an actual property funding belief (REIT) that specialises in logistics, retail parks and long-income belongings. At present sitting round 6%, its dividend yield has maintained a gradual place between 5% and seven% for the previous 12 months.

Most promisingly, it’s grown its payout yearly for the previous decade – a uncommon observe file, even amongst blue-chips. However what precisely is a REIT and why are they good for dividend revenue?

Regulated returns

REITs are a particular sort of firm construction that focuses on proudly owning and managing income-generating actual property. Underneath UK legislation, they’re required to distribute at the very least 90% of their property rental income to shareholders. That is why they’re usually a preferred selection amongst income-focused traders.

Please notice that tax remedy is determined by the person circumstances of every shopper and could also be topic to vary in future. The content material on this article is offered for info functions solely. It isn’t meant to be, neither does it represent, any type of tax recommendation.

LondonMetric’s focus is on sectors with structural demand tailwinds, akin to e-commerce warehouses and out-of-town retail. These belongings are inclined to have lengthy leases and decrease emptiness dangers, providing some resilience throughout financial downturns.

This mixture of long-term reliability and controlled revenue distribution makes it a very enticing prospect.

What’s the catch?

No funding is risk-free, and LondonMetric’s no exception. Rate of interest adjustments can influence each property values and debt servicing prices. Moreover, any main monetary disaster could be a major risk, significantly in the actual property sector (anybody keep in mind 2008?).

The belief’s emphasis on logistics and long-lease belongings gives some insulation. However no firm can future-proof itself fully from sudden environmental or geopolitical components.

Latest efficiency and financials

Taking a look at Londonmetric’s newest outcomes, earnings per share (EPS) rose 3% and lease assortment stays robust at over 99%. The corporate additionally reported a secure portfolio worth, with asset administration initiatives and rental uplifts serving to to offset valuation pressures from rising rates of interest.

Its dividend cowl sits at 70%, which is modest however typical for REITs. The steadiness sheet seems wholesome, with a loan-to-value ratio of round 32%, comfortably beneath sector averages.

Sluggish and regular

Londonmetric’s share price has barely moved up to now 12 months, nevertheless it nonetheless delivered a return of 8.3% with dividends. If the UK property market enjoys a notable restoration, this determine might rise above 10%.

It’s an instance of how dependable dividend shares play a significant function in constructing long-term wealth. No-brainer purchase? Perhaps not. However with a stable yield, a robust observe file and publicity to high-demand property segments, I imagine LondonMetric’s value contemplating as a part of an revenue portfolio.

That stated, no single inventory ought to carry the load. Diversification stays key – throughout sectors, asset varieties and geographies – to scale back danger and preserve these dividend streams flowing, even when markets flip bitter.