Yahoo Finance There's A Lot To Like About Titanium Transportation Group's (CVE:TTR) Upcoming CA$0.02 Dividend
Readers hoping to buy Titanium Transportation Group Inc. (CVE:TTR) 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. The ex-dividend date is important because any transaction on a stock needs to have been settled before the record date in order to be eligible for a dividend. Thus, you can purchase Titanium Transportation Group's shares before the 28th of May in order to receive the dividend, which the company will pay on the 15th of June.
The company's next dividend payment will be CA$0.02 per share, on the back of last year when the company paid a total of CA$0.08 to shareholders. Based on the last year's worth of payments, Titanium Transportation Group has a trailing yield of 2.0% on the current stock price of CA$3.95. Dividends are a major contributor to investment returns for long term holders, but only if the dividend continues to be paid. So we need to check whether the dividend payments are covered, and if earnings are growing.
View our latest analysis for Titanium Transportation Group
If a company pays out more in dividends than it earned, then the dividend might become unsustainable - hardly an ideal situation. Titanium Transportation Group paid out just 21% of its profit last year, which we think is conservatively low and leaves plenty of margin for unexpected circumstances. A useful secondary check can be to evaluate whether Titanium Transportation Group generated enough free cash flow to afford its dividend. It paid out 6.6% of its free cash flow as dividends last year, which is conservatively low.
It's positive to see that Titanium Transportation Group'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 the company's payout ratio, plus analyst estimates of its future dividends.
Have Earnings And Dividends Been Growing?
Stocks in companies that generate sustainable earnings growth often make the best dividend prospects, as it is easier to lift the dividend when earnings are rising. If business enters a downturn and the dividend is cut, the company could see its value fall precipitously. That's why it's comforting to see Titanium Transportation Group's earnings have been skyrocketing, up 37% per annum for the past five years. With earnings per share growing rapidly and the company sensibly reinvesting almost all of its profits within the business, Titanium Transportation Group looks like a promising growth company.
We'd also point out that Titanium Transportation Group 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.
Unfortunately Titanium Transportation Group 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
From a dividend perspective, should investors buy or avoid Titanium Transportation Group? We love that Titanium Transportation Group 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 Titanium Transportation Group has an appealing dividend, it's worth knowing the risks involved with this stock. For example, we've found 5 warning signs for Titanium Transportation Group that we recommend you consider before investing in the business.
If you're in the market for dividend stocks, we recommend checking our list of top dividend stocks with a greater than 2% yield and an upcoming dividend.
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. 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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