Terra Firma Capital (CVE:TII) Will Pay A Dividend Of $0.06
The board of Terra Firma Capital Corporation (CVE:TII) has announced that it will pay a dividend on the 13th of January, with investors receiving $0.06 per share. This means the dividend yield will be fairly typical at 4.7%.
View our latest analysis for Terra Firma Capital
Terra Firma Capital's Dividend Forecasted To Be Well Covered By Earnings
We like a dividend to be consistent over the long term, so checking whether it is sustainable is important.
Having paid out dividends for only 3 years, Terra Firma Capital does not have much of a history being a dividend paying company. Taking data from Terra Firma Capital's last earnings report, the payout ratio is at a decent 37%, meaning that the company is able to pay out its dividend with some room to spare.
Looking forward, earnings per share could rise by 32.7% over the next year if the trend from the last few years continues. If the dividend continues along recent trends, we estimate the future payout ratio will be 38%, which is in the range that makes us comfortable with the sustainability of the dividend.
Terra Firma Capital Doesn't Have A Long Payment History
The dividend has been pretty stable looking back, but the company hasn't been paying one for very long. This makes it tough to judge how it would fare through a full economic cycle. The dividend has gone from an annual total of $0.143 in 2019 to the most recent total annual payment of $0.174. This means that it has been growing its distributions at 6.7% per annum over that time. Terra Firma Capital has been growing its dividend at a decent rate, and the payments have been stable. However, the payment history is very short, so there is no evidence yet that the dividend can be sustained over a full economic cycle.
The Dividend Looks Likely To Grow
Investors could be attracted to the stock based on the quality of its payment history. Terra Firma Capital has seen EPS rising for the last five years, at 33% per annum. A low payout ratio gives the company a lot of flexibility, and growing earnings also make it very easy for it to grow the dividend.
Terra Firma Capital Looks Like A Great Dividend Stock
Overall, we think that this is a great income investment, and we think that maintaining the dividend this year may have been a conservative choice. The company is easily earning enough to cover its dividend payments and it is great to see that these earnings are being translated into cash flow. Taking this all into consideration, this looks like it could be a good dividend opportunity.
Companies possessing a stable dividend policy will likely enjoy greater investor interest than those suffering from a more inconsistent approach. At the same time, there are other factors our readers should be conscious of before pouring capital into a stock. Case in point: We've spotted 3 warning signs for Terra Firma Capital (of which 1 shouldn't be ignored!) you should know about. Looking for more high-yielding dividend ideas? Try our collection of strong dividend payers.
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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.
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