Timbercreek Financial (TSE:TF) Is Paying Out A Dividend Of CA$0.0575

Timbercreek Financial Corp.'s (TSE:TF) investors are due to receive a payment of CA$0.0575 per share on 15th of September. The dividend yield will be 8.3% based on this payment which is still above the industry average.

Check out our latest analysis for Timbercreek Financial

Timbercreek Financial Will Pay Out More Than It Is Earning

If the payments aren't sustainable, a high yield for a few years won't matter that much.

Timbercreek Financial has established itself as a dividend paying company, given its 6-year history of distributing earnings to shareholders. Despite this history however, Timbercreek Financial's latest earnings report actually shows that the company didn't have enough earnings to cover its dividends, paying out more than it earned. This value is at an alarming sign that could mean that Timbercreek Financial's dividend at its current rate may no longer be sustainable for longer.

Over the next year, EPS is forecast to expand by 19.1%. Assuming the dividend continues along recent trends, we think the future payout ratio could reach 120%, which probably can't continue putting some pressure on the balance sheet.

Timbercreek Financial Doesn't Have A Long Payment History

The dividend's track record has been pretty solid, but with only 6 years of history we want to see a few more years of history before making any solid conclusions. The dividend has gone from an annual total of CA$0.684 in 2016 to the most recent total annual payment of CA$0.69. Dividend payments have been growing, but very slowly over the period. Modest dividend growth is good to see, especially with the payments being relatively stable. However, the payment history is relatively short and we wouldn't want to rely on this dividend too much.

Dividend Growth May Be Hard To Come By

The company's investors will be pleased to have been receiving dividend income for some time. Unfortunately things aren't as good as they seem. Over the past five years, it looks as though Timbercreek Financial's EPS has declined at around 7.2% a year. If the company is making less over time, it naturally follows that it will also have to pay out less in dividends. Earnings are predicted to grow over the next year, but we would remain cautious until a track record of earnings growth is established.

We're Not Big Fans Of Timbercreek Financial's Dividend

In summary, while it is good to see that the dividend hasn't been cut, we think that at current levels the payment isn't particularly sustainable. The company isn't making enough to be paying as much as it is, and the other factors don't look particularly promising either. The dividend doesn't inspire confidence that it will provide solid income in the future.

Investors generally tend to favour companies with a consistent, stable dividend policy as opposed to those operating an irregular one. Meanwhile, despite the importance of dividend payments, they are not the only factors our readers should know when assessing a company. For instance, we've picked out 2 warning signs for Timbercreek Financial that investors should take into consideration. Is Timbercreek Financial not quite the opportunity you were looking for? Why not check out our selection of top dividend stocks.

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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.