Triple Point Energy Transition (LON:TENT) Will Pay A Dividend Of £0.0138

The board of Triple Point Energy Transition plc (LON:TENT) has announced that it will pay a dividend of £0.0138 per share on the 31st of March. This makes the dividend yield 7.9%, which will augment investor returns quite nicely.

Check out our latest analysis for Triple Point Energy Transition

Triple Point Energy Transition's Payment Has Solid Earnings Coverage

We like to see robust dividend yields, but that doesn't matter if the payment isn't sustainable. The last payment was quite easily covered by earnings, but it made up 255% of cash flows. While the company may be more focused on returning cash to shareholders than growing the business at this time, we think that a cash payout ratio this high might expose the dividend to being cut if the business ran into some challenges.

Over the next year, EPS could expand by 528.6% if trends from the past few years continue. If the dividend continues along recent trends, we estimate the payout ratio will be 7.8%, which is in the range that makes us comfortable about the dividend's sustainability.

Triple Point Energy Transition Doesn't Have A Long Payment History

The dividend has been pretty stable looking back, but the company hasn't been paying one for very long. This makes it tough to judge how it would fare through a full economic cycle. The last annual payment of £0.055 was flat on the annual payment from2 years ago. 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.

The Dividend Looks Likely To Grow

The company's investors will be pleased to have been receiving dividend income for some time. Triple Point Energy Transition has grown its EPS by 529% over the past 12 months. It's nice to see earnings per share rising, but one year is too short a period to get excited about. Were this trend to continue, we'd be interested. Triple Point Energy Transition is clearly able to grow rapidly while still returning cash to shareholders, positioning it to become a strong dividend payer in the future. However, we would never make any decisions based on only a single year of data, especially when assessing long term dividend potential.

Our Thoughts On Triple Point Energy Transition's Dividend

Overall, it's nice to see a consistent dividend payment, but we think that longer term, the current level of payment might be unsustainable. While Triple Point Energy Transition is earning enough to cover the payments, the cash flows are lacking. This company is not in the top tier of income providing stocks.

Market movements attest to how highly valued a consistent dividend policy is compared to one which is more unpredictable. At the same time, there are other factors our readers should be conscious of before pouring capital into a stock. As an example, we've identified 3 warning signs for Triple Point Energy Transition that you should be aware of before investing. Looking for more high-yielding dividend ideas? Try our collection of strong dividend payers.

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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.