Tiptree Inc. (NASDAQ:TIPT) Will Pay A US$0.04 Dividend In Four Days

By
Simply Wall St
Published
November 13, 2021
NasdaqCM:TIPT
Source: Shutterstock

Tiptree Inc. (NASDAQ:TIPT) is about to trade ex-dividend in the next 4 days. The ex-dividend date is usually set to be one business day before the record date which is the cut-off date on which you must be present on the company's books as a shareholder in order to receive the dividend. The ex-dividend date is of consequence because whenever a stock is bought or sold, the trade takes at least two business day to settle. Accordingly, Tiptree investors that purchase the stock on or after the 19th of November will not receive the dividend, which will be paid on the 29th of November.

The company's upcoming dividend is US$0.04 a share, following on from the last 12 months, when the company distributed a total of US$0.16 per share to shareholders. Based on the last year's worth of payments, Tiptree has a trailing yield of 1.1% on the current stock price of $14.99. 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! That's why we should always check whether the dividend payments appear sustainable, and if the company is growing.

View our latest analysis for Tiptree

If a company pays out more in dividends than it earned, then the dividend might become unsustainable - hardly an ideal situation. Tiptree paid out just 10% of its profit last year, which we think is conservatively low and leaves plenty of margin for unexpected circumstances.

When a company paid out less in dividends than it earned in profit, this generally suggests its dividend is affordable. The lower the % of its profit that it pays out, the greater the margin of safety for the dividend if the business enters a downturn.

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

historic-dividend
NasdaqCM:TIPT Historic Dividend November 14th 2021

Have Earnings And Dividends Been Growing?

Stocks with flat earnings can still be attractive dividend payers, but it is important to be more conservative with your approach and demand a greater margin for safety when it comes to dividend sustainability. If business enters a downturn and the dividend is cut, the company could see its value fall precipitously. It's not encouraging to see that Tiptree's earnings are effectively flat over the past five years. We'd take that over an earnings decline any day, but in the long run, the best dividend stocks all grow their earnings per share.

Another key way to measure a company's dividend prospects is by measuring its historical rate of dividend growth. Tiptree has seen its dividend decline 11% per annum on average over the past 10 years, which is not great to see.

Final Takeaway

Should investors buy Tiptree for the upcoming dividend? Tiptree's earnings per share are basically flat over the past five years, although it has the cushion of a low payout ratio, which would suggest a cut to the dividend is relatively unlikely. At best we would put it on a watch-list to see if business conditions improve, as it doesn't look like a clear opportunity right now.

With that being said, if dividends aren't your biggest concern with Tiptree, you should know about the other risks facing this business. To that end, you should learn about the 3 warning signs we've spotted with Tiptree (including 1 which is potentially serious).

A common investment mistake is buying the first interesting stock you see. Here you can find a list of promising dividend stocks with a greater than 2% yield and an upcoming dividend.

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