Timbercreek Financial (TSE:TF) Has Affirmed Its Dividend Of CA$0.0575

The board of Timbercreek Financial Corp. (TSE:TF) has announced that it will pay a dividend on the 15th of March, with investors receiving CA$0.0575 per share. The dividend yield will be 8.4% based on this payment which is still above the industry average.

View our latest analysis for Timbercreek Financial

Timbercreek Financial's Earnings Will Easily Cover The Distributions

Impressive dividend yields are good, but this doesn't matter much if the payments can't be sustained.

Timbercreek Financial has established itself as a dividend paying company, given its 7-year history of distributing earnings to shareholders. Past distributions unfortunately do not guarantee future ones, and Timbercreek Financial's last earnings report actually showed that the company went over its net earnings in its total dividend distribution. This is an alarming sign for the sustainability of its dividends, as it may mean that Timbercreek Financialis pulling cash from elsewhere to keep its shareholders happy.

EPS is set to grow by 30.7% over the next 3 years. Analysts estimate the future payout ratio could reach 91% over that same time period, which is on the higher side, but certainly still feasible.

Timbercreek Financial Doesn't Have A Long Payment History

It is great to see that Timbercreek Financial has been paying a stable dividend for a number of years now, however we want to be a bit cautious about whether this will remain true through a full economic cycle. Since 2016, the dividend has gone from CA$0.684 total annually to CA$0.69. Dividend payments have been growing, but very slowly over the period. Timbercreek Financial hasn't been paying a dividend for very long, so we wouldn't get to excited about its record of growth just yet.

Timbercreek Financial May Find It Hard To Grow The Dividend

The company's investors will be pleased to have been receiving dividend income for some time. However, things aren't all that rosy. Although it's important to note that Timbercreek Financial's earnings per share has basically not grown from where it was five years ago, which could erode the purchasing power of the dividend over time.

The Dividend Could Prove To Be Unreliable

Overall, we don't think this company makes a great dividend stock, even though the dividend wasn't cut this year. The track record isn't great, and the payments are a bit high to be considered sustainable. This company is not in the top tier of income providing stocks.

Investors generally tend to favour companies with a consistent, stable dividend policy as opposed to those operating an irregular one. Still, investors need to consider a host of other factors, apart from dividend payments, when analysing a company. For example, we've picked out 1 warning sign for Timbercreek Financial that investors should know about before committing capital to this stock. Looking for more high-yielding dividend ideas? Try our collection of strong dividend payers.

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