Teekay Tankers (NYSE:TNK) Ltd.'s shares are scheduled to go ex-dividend in four days, establishing a cutoff for shareholders to be eligible for the forthcoming dividend. The dividend, due on November 27, 2023, is fixed at $0.25 per share. This results in a trailing yield of 1.9% based on the current stock price of $52.32 and the total payout of $1.00 per share from the previous year.
Investors are encouraged to evaluate Teekay (NYSE:TK) Tankers' ability to increase dividends while also taking into account the potential risk of a dividend cut. Dividends are typically derived from earnings and can become unsustainable if they surpass the company's profits. Teekay Tankers, however, maintains a prudent after-tax profit payout of just 4.7%, providing a substantial safety buffer for unexpected events.
In addition, Teekay Tankers comfortably covered its dividends with free cash flow, disbursing only 8.1% last year. This indicates that the company has a strong financial position and is able to sustain its dividend payments even in times of economic uncertainty.
The trend of earnings and dividends growth is vital for robust dividend payers as an increase in earnings per share can fuel dividend growth. Over the past five years, Teekay Tankers has shown significant growth with a 34% annual increase in earnings.
However, it's important to note that despite this impressive growth, Teekay Tankers' dividends have remained at the same level as they were ten years ago. This suggests that while the company has managed to significantly grow its earnings, it has chosen to maintain a consistent dividend payout rather than increasing it in line with earnings growth.
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