Yahoo Finance Here's Why We're Wary Of Buying Taylor Maritime Investments' (LON:TMI) For Its Upcoming Dividend
Readers hoping to buy Taylor Maritime Investments Limited (LON:TMI) for its dividend will need to make their move shortly, as the stock is about to trade ex-dividend. Typically, the ex-dividend date is one business day before the record date which is the date on which a company determines the shareholders eligible to receive a dividend. It is important to be aware of the ex-dividend date because any trade on the stock needs to have been settled on or before the record date. Accordingly, Taylor Maritime Investments investors that purchase the stock on or after the 2nd of November will not receive the dividend, which will be paid on the 24th of November.
The company's next dividend payment will be US$0.02 per share, and in the last 12 months, the company paid a total of US$0.08 per share. Looking at the last 12 months of distributions, Taylor Maritime Investments has a trailing yield of approximately 9.3% on its current stock price of $0.86. Dividends are a major contributor to investment returns for long term holders, but only if the dividend continues to be paid. That's why we should always check whether the dividend payments appear sustainable, and if the company is growing.
See our latest analysis for Taylor Maritime Investments
If a company pays out more in dividends than it earned, then the dividend might become unsustainable - hardly an ideal situation. Taylor Maritime Investments paid out 101% of its earnings, which is more than we're comfortable with, unless there are mitigating circumstances.
When the dividend payout ratio is high, as it is in this case, the dividend is usually at greater risk of being cut in the future.
Click here to see how much of its profit Taylor Maritime Investments paid out over the last 12 months.
Have Earnings And Dividends Been Growing?
When earnings decline, dividend companies become much harder to analyse and own safely. If earnings fall far enough, the company could be forced to cut its dividend. From this perspective, we're disturbed to see earnings per share plunged 37% over the last 12 months, and we'd wonder if the company has had some kind of major event that has skewed the calculation.
The main way most investors will assess a company's dividend prospects is by checking the historical rate of dividend growth. Taylor Maritime Investments has delivered 6.9% dividend growth per year on average over the past two years. The only way to pay higher dividends when earnings are shrinking is either to pay out a larger percentage of profits, spend cash from the balance sheet, or borrow the money. Taylor Maritime Investments is already paying out a high percentage of its income, so without earnings growth, we're doubtful of whether this dividend will grow much in the future.
To Sum It Up
Is Taylor Maritime Investments an attractive dividend stock, or better left on the shelf? Not only are earnings per share shrinking, but Taylor Maritime Investments is paying out a disconcertingly high percentage of its profit as dividends. It's not that we hate the business, but we feel that these characeristics are not desirable for investors seeking a reliable dividend stock to own for the long term. All things considered, we're not optimistic about its dividend prospects, and would be inclined to leave it on the shelf for now.
So if you're still interested in Taylor Maritime Investments despite it's poor dividend qualities, you should be well informed on some of the risks facing this stock. To that end, you should learn about the 3 warning signs we've spotted with Taylor Maritime Investments (including 1 which is a bit concerning).
If you're in the market for strong dividend payers, we recommend checking our selection of top dividend stocks.
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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an 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 account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
