I can't get perplexity.ai to give me a DCF stock valuation for NSA.
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Perplexity.ai:
Does the free cashflow cover the dividend for NSA? Provide a change of thought.
The free cash flow (FCF) does cover the dividend for National Storage Affiliates Trust (NSA) as of the most recent data, but coverage is not especially robust and shows signs of pressure from declining profitability and higher payout rates.
Free Cash Flow vs. Dividend- NSA reported free cash flow of $195.68 million for the quarter ended June 30, 2025.
- For the same quarter, a dividend of $0.57 per share was declared and paid.
- NSA's dividend yield is around 7.0% TTM, while the quarterly free cash flow yield for Q2 2025 is just 1.78%.
Analysis of Coverage- According to reported metrics, NSA’s free cash flow per share for Q2 2025 is about $0.96.
- The declared quarterly dividend of $0.57 per share is comfortably covered by FCF per share for the quarter, with a payout ratio below 60% for the most recent period. However, in previous quarters, the payout ratio spiked significantly above 100%, indicating that NSA’s dividend is not always fully covered by FCF.
- Elevated payout ratios and relatively low free cash flow yield compared to dividend yield mean that coverage is adequate but not strong, and continued reductions in FCF or increases in payout could put pressure on future dividend sustainability.
Change of Thought- Earlier, NSA had strong coverage with higher FCF yields and lower payout ratios, but recent quarters show increased pressure—in Q2 2025, FCF yield dropped and payout ratios fluctuated, hinting at declining coverage strength.
- If FCF improves or remains stable, dividend coverage is likely secure; continued declines in FCF or rising dividends would weaken coverage and raise sustainability risks.
- NSA is still able to pay out its dividend from free cash flow, but investors should watch payout ratios and operating trends for signs of stress.
In summary, free cash flow covers NSA’s dividend for now, but the margin for safety has narrowed compared to prior periods, and future coverage will depend on improvements in FCF and operating income. |
