If You Invested $10,000 In CTO Realty Growth 5 Years Ago, Here's How Much You Would Be Making In Dividends Today

Dividend stock investing is an important part of financial planning for people nearing or in retirement. 

Careful dividend planning can provide a consistent and steady income for paying bills, traveling, assisting with the education of grandchildren or just having fun. But buying solid dividend companies is not always easy.

One way to measure the performance of a company is to look at its five-year dividend history. Five years of substantial dividend growth indicates a company has performed well through good and bad economic cycles and provides an inkling into its present earnings and forward potential.

Take a look at one real estate investment trust (REIT) with an impressive five-year dividend growth performance to see how much a $10,000 investment in July 2018 would be generating in dividends today.

CTO Realty Growth Inc. CTO is a Daytona Beach, Florida-based diversified REIT that owns and operates 24 retail, office and mixed-use properties totaling 4.2 million square feet. CTO Realty Growth also externally manages and owns a $37 million interest in Alpine Income Property Trust Inc. PINE, a net lease REIT. CTO Realty Growth's 90% occupancy rate has been stable since 2021 but is below pre-COVID occupancy levels of 95%. CTO has been acquiring properties and Dallas and Atlanta, where 31% of its real estate is located.

If you had invested $10,000 in CTO Realty Growth in July 2018, you would have purchased 587.88 shares at $17.01 per share. Your shares would now be worth $13,319.25 for a total gain of $3,319.25 or 33.19%. You would now be receiving about $893.58 per year in dividend income.

If you had reinvested your dividends rather than collecting them, you would now own 767.39 shares and the value of your stock would have grown to $13,810.57, a gain of 38.13%. You would now be receiving about $1,166.43 per year in dividend income.

In July 2018, CTO Realty paid a nominal quarterly dividend of $0.016 per share. But over the next 10 quarters, CTO Realty raised its dividend eight times, reaching $0.3943 by March 2021. CTO Realty then cut the dividend to $0.333 but again raised it three times in 2022 to its present amount of $0.38 per share. The dividend has remained the same since September 2022, but that's a 2,364% increase in less than five years.

The forward annual dividend of $1.52 per share presently yields 8.44%.

While that's decent growth in both earnings and dividends, one caveat is that CTO Realty's forward annual funds from operations (FFO) is presently $1.58. The $1.52 annual dividend gives CTO Realty a high FFO payout ratio of 96%. In a best-case scenario, the dividend will probably remain flat for the foreseeable future, and in the worst-case scenario, another dividend cut is possible should FFO diminish over future quarters.

CTO Realty's second-quarter 2023 operating results will be announced after the closing bell on July 27. With the payout ratio so close to 100%, it probably pays to wait until after earnings are announced before deciding whether shares are worth acquiring.

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