Income Investors Should Know That Townsquare Media, Inc. (NYSE:TSQ) Goes Ex-Dividend Soon
Regular readers will know that we love our dividends at Simply Wall St, which is why it's exciting to see Townsquare Media, Inc. (NYSE:TSQ) is about to trade ex-dividend in the next 4 days. The ex-dividend date is one business day before the record date, which is the cut-off date for shareholders to be present on the company's books to be eligible for a dividend payment. It is important to be aware of the ex-dividend date because any trade on the stock needs to have been settled on or before the record date. Meaning, you will need to purchase Townsquare Media's shares before the 29th of December to receive the dividend, which will be paid on the 1st of February.
The company's next dividend payment will be US$0.19 per share. Last year, in total, the company distributed US$0.75 to shareholders. Based on the last year's worth of payments, Townsquare Media stock has a trailing yield of around 7.0% on the current share price of $10.69. Dividends are a major contributor to investment returns for long term holders, but only if the dividend continues to be paid. That's why we should always check whether the dividend payments appear sustainable, and if the company is growing.
View our latest analysis for Townsquare Media
Dividends are typically paid out of company income, so if a company pays out more than it earned, its dividend is usually at a higher risk of being cut. Townsquare Media reported a loss last year, so it's not great to see that it has continued paying a dividend. With the recent loss, it's important to check if the business generated enough cash to pay its dividend. If cash earnings don't cover the dividend, the company would have to pay dividends out of cash in the bank, or by borrowing money, neither of which is long-term sustainable. The good news is it paid out just 15% of its free cash flow in the last year.
Click here to see the company's payout ratio, plus analyst estimates of its future dividends.
Have Earnings And Dividends Been Growing?
Businesses with strong growth prospects usually make the best dividend payers, because it's easier to grow dividends when earnings per share are improving. If earnings fall far enough, the company could be forced to cut its dividend. Townsquare Media reported a loss last year, but at least the general trend suggests its income has been improving over the past five years. Even so, an unprofitable company whose business does not quickly recover is usually not a good candidate for dividend investors.
Many investors will assess a company's dividend performance by evaluating how much the dividend payments have changed over time. In the last six years, Townsquare Media has lifted its dividend by approximately 16% a year on average. It's great to see earnings per share growing rapidly over several years, and dividends per share growing right along with it.
We update our analysis on Townsquare Media every 24 hours, so you can always get the latest insights on its financial health, here.
The Bottom Line
Should investors buy Townsquare Media for the upcoming dividend? It's hard to get used to Townsquare Media paying a dividend despite reporting a loss over the past year. At least the dividend was covered by free cash flow, however. To summarise, Townsquare Media looks okay on this analysis, although it doesn't appear a stand-out opportunity.
On that note, you'll want to research what risks Townsquare Media is facing. In terms of investment risks, we've identified 1 warning sign with Townsquare Media and understanding them should be part of your investment process.
If you're in the market for strong dividend payers, we recommend checking our selection of top dividend stocks.
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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
