Don't Race Out To Buy Taylor Maritime Investments Limited (LON:TMI) Just Because It's Going Ex-Dividend

Some investors rely on dividends for growing their wealth, and if you're one of those dividend sleuths, you might be intrigued to know that Taylor Maritime Investments Limited (LON:TMI) is about to go ex-dividend in just three days. The ex-dividend date occurs one day before the record date which is the day on which shareholders need to be on the company's books in order to receive a dividend. The ex-dividend date is important because any transaction on a stock needs to have been settled before the record date in order to be eligible for a dividend. Therefore, if you purchase Taylor Maritime Investments' shares on or after the 9th of May, you won't be eligible to receive the dividend, when it is paid on the 31st of May.

The company's next dividend payment will be US$0.02 per share, on the back of last year when the company paid a total of US$0.08 to shareholders. Last year's total dividend payments show that Taylor Maritime Investments has a trailing yield of 7.7% on the current share price of US$1.04. If you buy this business for its dividend, you should have an idea of whether Taylor Maritime Investments's dividend is reliable and sustainable. That's why we should always check whether the dividend payments appear sustainable, and if the company is growing.

See our latest analysis for Taylor Maritime Investments

Dividends are typically paid from company earnings. If a company pays more in dividends than it earned in profit, then the dividend could be unsustainable. Taylor Maritime Investments reported a loss after tax last year, which means it's paying a dividend despite being unprofitable. While this might be a one-off event, this is unlikely to be sustainable in the long term.

Click here to see how much of its profit Taylor Maritime Investments paid out over the last 12 months.

Have Earnings And Dividends Been Growing?

Businesses with shrinking earnings are tricky from a dividend perspective. If business enters a downturn and the dividend is cut, the company could see its value fall precipitously. Taylor Maritime Investments was unprofitable last year, and sadly its loss per share worsened by 177% on the previous year.

The main way most investors will assess a company's dividend prospects is by checking the historical rate of dividend growth. Taylor Maritime Investments has delivered 6.9% dividend growth per year on average over the past two years.

Remember, you can always get a snapshot of Taylor Maritime Investments's financial health, by checking our visualisation of its financial health, here.

Final Takeaway

Is Taylor Maritime Investments an attractive dividend stock, or better left on the shelf? First, it's not great to see the company paying a dividend despite being loss-making over the last year. Worse, the general trend in its earnings looks negative in recent years. All things considered, we're not optimistic about its dividend prospects, and would be inclined to leave it on the shelf for now.

Having said that, if you're looking at this stock without much concern for the dividend, you should still be familiar of the risks involved with Taylor Maritime Investments. Case in point: We've spotted 3 warning signs for Taylor Maritime Investments you should be aware of.

A common investing mistake is buying the first interesting stock you see. Here you can find a full list of high-yield 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.