Trust Financial Corporation (NYSE:TFC) will pay a dividend of $0.52 on June 3rd. Based on this payment, the company's stock has a dividend yield of 5.4%, an attractive boost to shareholder returns.
Check out our latest analysis for Truist Financial.
Trust Financial's earnings should easily cover the distribution.
If the payments aren't sustainable, a few years of high yields won't matter much.
Truist Financial has established itself as a dividend paying company with over a decade of history of distributing profits to shareholders. However, despite this history, the company's most recent earnings report shows that it actually didn't earn enough to cover its dividend. This is a worrying sign for dividend sustainability, as it could mean Truist Financialis is pulling cash elsewhere to satisfy shareholders.
According to analysts, EPS should increase several times over the next three years. Furthermore, they estimate that the future dividend payout ratio could reach 53% within the same period and believe this level will continue.
Trust Financial has a proven track record
Even with a long history of dividends, the company's dividends have been extremely stable. Annual payments for the past 10 years were $0.92 in 2014 and $2.08 for the most recent fiscal year. This means that the company increased its distribution at a rate of approximately 8.5% per year during that period. Since dividend growth is fairly reliable, we believe this can provide investors with a nice additional income to their portfolio.
Increasing dividends may be difficult
Investors in the company will be happy to receive dividend income for some time to come. However, things are not so rosy. Trust Financial has seen its earnings per share decline at an annual rate of 9.7% over the past five years. When profits decline, companies will inevitably reduce their dividends in line with the decline in profits. We expect earnings to grow next year, but we remain cautious until a track record of earnings growth is established.
I don't think Trust Financial's dividend is sustainable.
In summary, while it's good that the dividend hasn't been cut, we should be a little cautious about Trust Financial's payouts, as there could be some issues with maintaining the dividend in the future. Masu. Although it cannot be denied that the payments are very stable, I am a little worried that the dividend payout ratio is very high. You'll probably look elsewhere for more profitable investments.
It's important to note that companies with a consistent dividend policy generate greater investor confidence than companies with an erratic dividend policy. However, there are other things investors should consider when analyzing stock performance. For example, we identified 1 warning sign for Truist Financial What you need to know before investing. Is Truist Financial the opportunity you've been looking for? Why not check it out? Selection of high dividend stocks.
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This article by Simply Wall St is general in nature. We provide commentary using only unbiased methodologies, based on historical data and analyst forecasts, and articles are not intended to be financial advice. This is not a recommendation to buy or sell any stock, and does not take into account your objectives or financial situation. We aim to provide long-term, focused analysis based on fundamental data. Note that our analysis may not factor in the latest announcements or qualitative material from price-sensitive companies. Simply Wall St has no position in any stocks mentioned.
