Yahoo Finance Don't Race Out To Buy TPG RE Finance Trust, Inc. (NYSE:TRTX) Just Because It's Going Ex-Dividend
It looks like TPG RE Finance Trust, Inc. (NYSE:TRTX) is about to go ex-dividend in the next 2 days. Ex-dividend means that investors that purchase the stock on or after the 26th of September will not receive this dividend, which will be paid on the 25th of October.
TPG RE Finance Trust's upcoming dividend is US$0.4 a share, following on from the last 12 months, when the company distributed a total of US$1.7 per share to shareholders. Based on the last year's worth of payments, TPG RE Finance Trust stock has a trailing yield of around 8.4% on the current share price of $20.42. If you buy this business for its dividend, you should have an idea of whether TPG RE Finance Trust's dividend is reliable and sustainable. That's why we should always check whether the dividend payments appear sustainable, and if the company is growing.
See our latest analysis for TPG RE Finance Trust
Dividends are typically paid from company earnings. If a company pays more in dividends than it earned in profit, then the dividend could be unsustainable. Last year, TPG RE Finance Trust paid out 102% of its income as dividends, which is above a level that we're comfortable with, especially if the company needs to reinvest in its business.
When a company pays out a dividend that is not well covered by profits, the dividend is generally seen as more vulnerable to being cut.
Click here to see the company's payout ratio, plus analyst estimates of its future dividends.
Have Earnings And Dividends Been Growing?
Stocks with flat earnings can still be attractive dividend payers, but it is important to be more conservative with your approach and demand a greater margin for safety when it comes to dividend sustainability. Investors love dividends, so if earnings fall and the dividend is reduced, expect a stock to be sold off heavily at the same time. It's not encouraging to see that TPG RE Finance Trust's earnings are effectively flat over the past five years. Better than seeing them fall off a cliff, for sure, but the best dividend stocks grow their earnings meaningfully over the long run.
We'd also point out that TPG RE Finance Trust issued a meaningful number of new shares in the past year. Trying to grow the dividend while issuing large amounts of new shares reminds us of the ancient Greek tale of Sisyphus - perpetually pushing a boulder uphill.
Another key way to measure a company's dividend prospects is by measuring its historical rate of dividend growth. TPG RE Finance Trust has delivered an average of 14% per year annual increase in its dividend, based on the past two years of dividend payments.
To Sum It Up
Is TPG RE Finance Trust worth buying for its dividend? Earnings per share have not grown at all and TPG RE Finance Trust is paying out an uncomfortably high percentage of its profit as dividends. These characteristics don't generally lead to outstanding dividend performance, and investors may not be happy with the results of owning this stock for its dividend.
Wondering what the future holds for TPG RE Finance Trust? See what the five analysts we track are forecasting, with this visualisation of its historical and future estimated earnings and cash flow
A common investment mistake is buying the first interesting stock you see. Here you can find a list of promising dividend stocks with a greater than 2% yield and an upcoming dividend.
We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.
If you spot an error that warrants correction, please contact the editor at editorial-team@simplywallst.com. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned. Thank you for reading.
