Dividend Investors: Don't Be Too Quick To Buy Triple Point Energy Transition plc (LON:TENT) For Its Upcoming Dividend

Triple Point Energy Transition plc (LON:TENT) is about to trade ex-dividend in the next four days. The ex-dividend date is one business day before a company's record date, which is the date on which the company determines which shareholders are entitled to receive a dividend. The ex-dividend date is important as the process of settlement involves two full business days. So if you miss that date, you would not show up on the company's books on the record date. Therefore, if you purchase Triple Point Energy Transition's shares on or after the 4th of July, you won't be eligible to receive the dividend, when it is paid on the 19th of July.

The company's next dividend payment will be UK£0.01375 per share. Last year, in total, the company distributed UK£0.055 to shareholders. Based on the last year's worth of payments, Triple Point Energy Transition stock has a trailing yield of around 8.4% on the current share price of UK£0.658. If you buy this business for its dividend, you should have an idea of whether Triple Point Energy Transition's dividend is reliable and sustainable. So we need to check whether the dividend payments are covered, and if earnings are growing.

See our latest analysis for Triple Point Energy Transition

Dividends are typically paid out of company income, so if a company pays out more than it earned, its dividend is usually at a higher risk of being cut. Triple Point Energy Transition paid a dividend last year despite being unprofitable. This might be a one-off event, but it's not a sustainable state of affairs in the long run.

Click here to see how much of its profit Triple Point Energy Transition paid out over the last 12 months.

Have Earnings And Dividends Been Growing?

Businesses with shrinking earnings are tricky from a dividend perspective. Investors love dividends, so if earnings fall and the dividend is reduced, expect a stock to be sold off heavily at the same time. Triple Point Energy Transition was unprofitable last year and, unfortunately, the general trend suggests its earnings have been in decline over the last three years, making us wonder if the dividend is sustainable at all.

Another key way to measure a company's dividend prospects is by measuring its historical rate of dividend growth. It looks like the Triple Point Energy Transition dividends are largely the same as they were three years ago. When earnings are declining yet the dividends are flat, typically the company is either paying out a higher portion of its earnings, or paying out of cash or debt on the balance sheet, neither of which is ideal.

Remember, you can always get a snapshot of Triple Point Energy Transition's financial health, by checking our visualisation of its financial health, here.

To Sum It Up

Is Triple Point Energy Transition an attractive dividend stock, or better left on the shelf? It's definitely not great to see that it paid a dividend despite reporting a loss last year. Worse, the general trend in its earnings looks negative in recent times. This is not an overtly appealing combination of characteristics, and we're just not that interested in this company's dividend.

Although, if you're still interested in Triple Point Energy Transition and want to know more, you'll find it very useful to know what risks this stock faces. For instance, we've identified 4 warning signs for Triple Point Energy Transition (3 make us uncomfortable) you should be aware of.

If you're in the market for strong dividend payers, we recommend checking 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.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team@simplywallst.com