Tricon Residential Inc. The stock (TSE: TCN) is about to trade off-dividend in three days. Typically, the ex-dividend date is one business day prior to the record date which is the date a company determines which shareholders are eligible to receive a dividend. The ex-dividend date is important because any share transaction must have been settled before the registration date to be eligible for a dividend. Therefore, if you buy Tricon Residential shares on or after December 30, you will not be able to receive the dividend when it is paid on January 17.
The company’s next dividend payment will be US $ 0.058 per share, compared to last year when the company paid a total of US $ 0.22 to shareholders. Based on last year’s payouts, Tricon Residential has a rolling 1.6% return on the current stock price of C $ 19.16. Dividends are an important source of income for many shareholders, but the health of the business is crucial to sustaining these dividends. As a result, readers should always check whether Tricon Residential has been able to increase its dividends or if the dividend could be reduced.
See our latest review for Tricon Residential
Dividends are generally paid out of company profits. If a company pays more dividends than it made a profit, then the dividend could be unsustainable. Tricon Residential paid only 9.6% of its profit last year, which in our opinion is moderately low and leaves a lot of room for unforeseen circumstances. A useful secondary check may be to assess whether Tricon Residential has generated enough free cash flow to pay its dividend. It distributed 41% of its free cash flow as dividends, a comfortable payout level for most companies.
It is positive to see that Tricon Residential’s dividend is covered by both earnings and cash flow, as this is usually a sign that the dividend is sustainable, and a lower payout ratio usually suggests a larger margin. security before the dividend is cut.
Click here to view the company’s payout ratio, as well as analysts’ estimates of its future dividends.
Have profits and dividends increased?
Stocks of companies that generate sustainable earnings growth often offer the best dividend prospects because it’s easier to raise the dividend when earnings rise. If profits fall enough, the company could be forced to cut its dividend. That’s why it’s heartwarming to see that Tricon Residential’s revenue has skyrocketed, up 23% annually for the past five years. Tricon Residential is paying less than half of its earnings and cash flow, while simultaneously increasing earnings per share at a rapid pace. Companies with increasing profits and low payout ratios are often the best long-term dividend-paying stocks, as the company can both increase profits and increase the percentage of profits it pays out, essentially multiplying the dividend. .
We also draw attention to the fact that Tricon Residential has issued a significant number of new shares in the past year. It is difficult to increase dividends per share when a company keeps creating new shares.
Another key way to measure a company’s dividend outlook is to measure its historical rate of dividend growth. Tricon Residential’s dividend payouts per share have declined 0.6% per year on average over the past 10 years, which is not inspiring.
The bottom line
Is Tricon Residential Worth Buying For Its Dividend? Tricon Residential increased earnings per share while simultaneously reinvesting in the business. Unfortunately, the dividend has been reduced at least once in the past 10 years, but the conservative payout ratio makes the current dividend look sustainable. Tricon Residential looks solid on this analysis overall, and we would definitely consider taking a closer look.
Although it is tempting to invest in Tricon Residential for dividends only, you should always be aware of the risks involved. We have identified 5 warning signs with Tricon Residential (at least 2 of which are significant), and understanding them should be part of your investment process.
However, we don’t recommend simply buying the first dividend stock you see. Here is a list of interesting dividend paying stocks with a yield above 2% and a dividend coming soon.
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This Simply Wall St article is general in nature. We provide commentary based on historical data and analyst forecasts using only unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock and does not take into account your goals or your financial situation. Our aim is to bring you long-term, targeted analysis based on fundamental data. Note that our analysis may not take into account the latest announcements from price sensitive companies or qualitative documents. Simply Wall St has no position in any of the stocks mentioned.