Yahoo Finance Tamarack Valley Energy Ltd. (TSE:TVE) Passed Our Checks, And It's About To Pay A CA$0.013 Dividend
Tamarack Valley Energy Ltd. (TSE:TVE) stock is about to trade ex-dividend in 4 days. The ex-dividend date is one business day before the record date, which is the cut-off date for shareholders to be present on the company's books to be eligible for a dividend payment. 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. Meaning, you will need to purchase Tamarack Valley Energy's shares before the 30th of January to receive the dividend, which will be paid on the 15th of February.
The company's next dividend payment will be CA$0.013 per share, and in the last 12 months, the company paid a total of CA$0.12 per share. Based on the last year's worth of payments, Tamarack Valley Energy has a trailing yield of 3.2% on the current stock price of CA$4.67. We love seeing companies pay a dividend, but it's also important to be sure that laying the golden eggs isn't going to kill our golden goose! So we need to check whether the dividend payments are covered, and if earnings are growing.
Check out our latest analysis for Tamarack Valley Energy
If a company pays out more in dividends than it earned, then the dividend might become unsustainable - hardly an ideal situation. Tamarack Valley Energy is paying out just 8.0% of its profit after tax, which is comfortably low and leaves plenty of breathing room in the case of adverse events. Yet cash flow is typically more important than profit for assessing dividend sustainability, so we should always check if the company generated enough cash to afford its dividend. Luckily it paid out just 13% of its free cash flow last year.
It's positive to see that Tamarack Valley Energy's dividend is covered by both profits and cash flow, since this is generally a sign that the dividend is sustainable, and a lower payout ratio usually suggests a greater margin of safety before the dividend gets cut.
Click here to see how much of its profit Tamarack Valley Energy paid out over the last 12 months.
Have Earnings And Dividends Been Growing?
Businesses with strong growth prospects usually make the best dividend payers, because it's easier to grow dividends when earnings per share are improving. 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 encouraging to see Tamarack Valley Energy has grown its earnings rapidly, up 28% a year for the past five years. Tamarack Valley Energy looks like a real growth company, with earnings per share growing at a cracking pace and the company reinvesting most of its profits in the business.
Unfortunately Tamarack Valley Energy has only been paying a dividend for a year or so, so there's not much of a history to draw insight from.
To Sum It Up
Is Tamarack Valley Energy worth buying for its dividend? We love that Tamarack Valley Energy is growing earnings per share while simultaneously paying out a low percentage of both its earnings and cash flow. These characteristics suggest the company is reinvesting in growing its business, while the conservative payout ratio also implies a reduced risk of the dividend being cut in the future. It's a promising combination that should mark this company worthy of closer attention.
In light of that, while Tamarack Valley Energy has an appealing dividend, it's worth knowing the risks involved with this stock. Case in point: We've spotted 2 warning signs for Tamarack Valley Energy you should be aware of.
If you're in the market for strong dividend payers, we recommend checking our selection of top dividend stocks.
Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.
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.
Join A Paid User Research Session
You’ll receive a US$30 Amazon Gift card for 1 hour of your time while helping us build better investing tools for the individual investors like yourself. Sign up here
