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Tamarack Valley Energy Ltd. (TSE:TVE) is about to trade ex-dividend in the next 4 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 of consequence because whenever a stock is bought or sold, the trade takes at least two business day to settle. Meaning, you will need to purchase Tamarack Valley Energy's shares before the 28th of February to receive the dividend, which will be paid on the 14th of March.
The company's next dividend payment will be CA$0.01275 per share, and in the last 12 months, the company paid a total of CA$0.15 per share. Last year's total dividend payments show that Tamarack Valley Energy has a trailing yield of 3.4% on the current share price of CA$4.48. Dividends are an important source of income to many shareholders, but the health of the business is crucial to maintaining those dividends. As a result, readers should always check whether Tamarack Valley Energy has been able to grow its dividends, or if the dividend might be cut.
See our latest analysis for Tamarack Valley Energy
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. That's why it's good to see Tamarack Valley Energy paying out a modest 39% of its earnings. A useful secondary check can be to evaluate whether Tamarack Valley Energy generated enough free cash flow to afford its dividend. The good news is it paid out just 21% of its free cash flow in the last year.
It's positive to see that Tamarack Valley Energy's dividend is covered by both profits and cash flow, since this is generally a sign that the dividend is sustainable, and a lower payout ratio usually suggests a greater margin of safety before the dividend gets cut.
Click here to see the company's payout ratio, plus analyst estimates of its future dividends.
Have Earnings And Dividends Been Growing?
Companies with consistently growing earnings per share generally make the best dividend stocks, as they usually find it easier to grow dividends per share. If business enters a downturn and the dividend is cut, the company could see its value fall precipitously. For this reason, we're glad to see Tamarack Valley Energy's earnings per share have risen 19% per annum over the last five years. Earnings per share are growing rapidly and the company is keeping more than half of its earnings within the business; an attractive combination which could suggest the company is focused on reinvesting to grow earnings further. Fast-growing businesses that are reinvesting heavily are enticing from a dividend perspective, especially since they can often increase the payout ratio later.