Investors who want to cash in on TOC Property Backed Lending Trust Plc’s (LON:PBLT) upcoming dividend of UK£0.018 per share have only 4 days left to buy the shares before its ex-dividend date, 13 September 2018, in time for dividends payable on the 04 October 2018. Investors looking for higher income-generating stocks to add to their portfolio should keep reading, as I examine TOC Property Backed Lending Trust’s latest financial data to analyse its dividend characteristics.
See our latest analysis for TOC Property Backed Lending Trust
5 questions to ask before buying a dividend stock
Whenever I am looking at a potential dividend stock investment, I always check these five metrics:
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Is its annual yield among the top 25% of dividend-paying companies?
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Does it consistently pay out dividends without missing a payment of significantly cutting payout?
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Has the amount of dividend per share grown over the past?
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Is its earnings sufficient to payout dividend at the current rate?
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Based on future earnings growth, will it be able to continue to payout dividend at the current rate?
How does TOC Property Backed Lending Trust fare?
The current trailing twelve-month payout ratio for PBLT is 125%, meaning the dividend is not sufficiently covered by its earnings. Furthermore, analysts have not forecasted a dividends per share for the future, which makes it hard to determine the yield shareholders should expect, and whether the current payout is sustainable, moving forward.
When considering the sustainability of dividends, it is also worth checking the cash flow of a company. Cash flow is important because companies with strong cash flow can usually sustain higher payout ratios.
If dividend is a key criteria in your investment consideration, then you need to make sure the dividend stock you’re eyeing out is reliable in its payments. The reality is that it is too early to consider TOC Property Backed Lending Trust as a dividend investment. It has only been paying out dividend for the past one year. Generally, the rule of thumb for determining whether a stock is a reliable dividend payer is that it should be consistently paying dividends for the past 10 years or more. Clearly there’s a long road ahead before we can ascertain whether PBLT one as a stable dividend player.
In terms of its peers, TOC Property Backed Lending Trust produces a yield of 6.8%, which is high for Mortgage stocks.
Next Steps:
After digging a little deeper into TOC Property Backed Lending Trust’s yield, it’s easy to see why you should be cautious investing in the company just for the dividend. But if you are not exclusively a dividend investor, the stock could still be an interesting investment opportunity. Given that this is purely a dividend analysis, you should always research extensively before deciding whether or not a stock is an appropriate investment for you. I always recommend analysing the company’s fundamentals and underlying business before making an investment decision. I’ve put together three important factors you should look at: