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

It looks like Triple Point Energy Transition plc (LON:TENT) is about to go ex-dividend in the next three 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. In other words, investors can purchase Triple Point Energy Transition's shares before the 5th of September in order to be eligible for the dividend, which will be paid on the 20th of September.

The company's next dividend payment will be UK£0.01375 per share, and in the last 12 months, the company paid a total of UK£0.055 per share. Based on the last year's worth of payments, Triple Point Energy Transition stock has a trailing yield of around 7.7% on the current share price of UK£0.712. We love seeing companies pay a dividend, but it's also important to be sure that laying the golden eggs isn't going to kill our golden goose! So we need to investigate whether Triple Point Energy Transition can afford its dividend, and if the dividend could grow.

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 reported a loss last year, so it's not great to see that it has continued paying a dividend.

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. If earnings decline and the company is forced to cut its dividend, investors could watch the value of their investment go up in smoke. Triple Point Energy Transition reported a loss last year, and the general trend suggests its earnings have also been declining in recent years, making us wonder if the dividend is at risk.

The main way most investors will assess a company's dividend prospects is by checking the historical rate of dividend growth. It looks like the Triple Point Energy Transition dividends are largely the same as they were three years ago. If a company's dividend stays flat while earnings are in decline, this is typically a sign that it is paying out a larger percentage of its earnings. This can become unsustainable if earnings fall far enough.

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

The Bottom Line

Has Triple Point Energy Transition got what it takes to maintain its dividend payments? 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. All things considered, we're not optimistic about its dividend prospects, and would be inclined to leave it on the shelf for now.

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 are significant) 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.