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TriplePoint Venture Growth BDC Corp. TPVG has approved a special dividend of 10 cents per share. The dividend will be paid out on Jan 13, 2021, to shareholders of record as of Dec 31, 2020.
The special dividend reflects part of the significant capital gain earned from the company’s warrant and equity portfolio.
As of Sep 30, 2020, the undistributed net capital gain along with the estimated undistributed taxable earnings from net investment income was 33 cents per share. This amount will spill-over into the next year.
TriplePoint’s chairman and CEO, Jim Labe, stated, “We benefited from our warrant and equity portfolio in 2020, generating significant capital gains for shareholders. The declaration of our third special distribution since our IPO highlights the powerful warrant and equity investment components of our returns and underscores TPVG’s differentiated business model.”
The company’s president and chief investment officer, Sajal Srivastava, said, “We are uniquely positioned to generate additional long-term shareholder returns from our warrant and equity investments. This complements our high yielding venture debt portfolio, which has enabled TPVG to generate income in excess of our distributions since our IPO on a cumulative basis and for the past 4 years in a row.”
Notably, shareholders can either choose to receive the special dividend in cash or opt to receive shares of the company’s common stock pursuant to the dividend reinvestment plan.
TriplePoint has been regularly paying a dividend of 36 cents per share for the past five-six years. The last quarterly dividend was paid out on Dec 14, 2020, to shareholders of record as of Nov 27.
Hence, through consistent dividend payments, the company is expected to continue to enhance shareholder value.
While TriplePoint stock looks like an attractive investment option based on its efficient capital deployment activities, let’s see whether it is worthwhile to consider the stock right now. A deeper research into its fundamentals will likely help us understand the risks and rewards.
If we look at the company’s organic growth trajectory, its revenues have witnessed a compound annual growth rate (CAGR) of 14.9% over the past five years (2015-2019). The uptrend in revenues is expected to continue in the near term as reflected by the company’s projected sales growth rate of 21.5% for 2020 and 1.3% for 2021.
Moreover, TriplePoint’s return on equity currently stands at 12.21%, which is above the industry average of 8.60%. This shows that it is more efficient than peers in utilizing shareholders’ funds.
Also, over the past three-five years, the company has witnessed earnings growth of 2.5%. Notably, its earnings are projected to grow 1.3% in 2020 and 0.6% in 2021.
However, based on the price/book (P/B) and price/cash flow (P/CF) ratios, TriplePoint stock currently seems to be overvalued. Its P/B ratio is 0.95, higher than the industry average of 0.83. Also, its P/CF ratio of 8.71 compares unfavorably with the industry’s 8.49.
Also, over the past 30 days, the Zacks Consensus Estimate for the company’s current-year earnings has been unchanged at $1.56 per share. This shows that analysts have a neutral stance toward the stock. Hence, TriplePoint currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Looking at its price performance, shares of the company have lost 11.4% over the past year compared with the industry’s decline of 18.2%.
Other Finance Companies That Took Similar Action
Recently, many finance companies have undertaken efforts to reward shareholders by announcing special dividends. Some of these are Cohen & Steers CNS, Waterstone Financial WSBF and Eaton Vance EV.
Cohen & Steers declared a special dividend of $1 per share, which was paid out on Dec 1 to shareholders of record as of Nov 16. Waterstone Financial announced a special dividend of 30 cents per share, which was paid out on Dec 8 to shareholders of record as of Dec 1. For Eaton Vance, a special dividend of $4.25 per share was announced, which was paid out on Dec 18 to shareholders of record as of Dec 4.
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Cohen & Steers Inc (CNS) : Free Stock Analysis Report
Eaton Vance Corporation (EV) : Free Stock Analysis Report
TriplePoint Venture Growth BDC Corp. (TPVG) : Free Stock Analysis Report
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