Month-to-month Dividend Inventory In Focus: Timbercreek Monetary Company

Up to date on April thirtieth, 2025 by Felix Martinez

Timbercreek Monetary Company (TBCRF) has two interesting funding traits:

#1: It’s a high-yield inventory primarily based on its 9.9% dividend yield.
Associated: Checklist of 5%+ yielding shares.
#2: It pays dividends month-to-month as a substitute of quarterly.
Associated: Checklist of month-to-month dividend shares

You possibly can obtain our full Excel spreadsheet of all month-to-month dividend shares (together with metrics that matter like dividend yield and payout ratio) by clicking on the hyperlink beneath:

The mixture of a excessive yield and a month-to-month dividend renders Timbercreek Monetary interesting to particular person traders.

However there’s extra to the corporate than simply these elements. Preserve studying this text to study extra about Timbercreek Monetary.

Enterprise Overview

Timbercreek Monetary is a mortgage funding firm that gives shorter-duration structured financing options to business actual property traders in Canada. The corporate focuses on lending towards income-producing actual property properties, akin to multi-residential, retail, and workplace properties in city markets. Timbercreek Monetary was based in 2016 and is headquartered in Toronto, Canada.

Timbercreek Monetary employs a service-oriented enterprise strategy, providing debtors quicker execution and extra versatile phrases in comparison with Canadian monetary establishments. This is among the the explanation why its clients resort to Timbercreek Monetary as a substitute of utilizing conventional banking channels.

Roughly 86.5% of Timbercreek Monetary’s properties within the portfolio are income-producing.

Supply: Investor Presentation

This characteristic is paramount, because it renders the loans offered by the corporate rather more dependable. Furthermore, 97% of the entire portfolio is invested in city markets, that are dependable.

As a result of nature of its enterprise, Timbercreek Monetary is delicate to the underlying financial circumstances. A few of its clients can not borrow funds by means of conventional banking channels, and due to this fact, they’re usually weak throughout financial downturns.

Certainly, Timbercreek Monetary was harm by the fierce recession brought on by the coronavirus disaster. In 2020, the corporate incurred a 39% lower in its earnings per share, from $0.51 to $0.31. Happily, the recession proved short-lived because of the unprecedented fiscal stimulus packages provided by the Canadian authorities in response to the pandemic. In consequence, Timbercreek Monetary has totally recovered from this disaster.

In This autumn 2024, Timbercreek Monetary grew its web mortgage funding portfolio by $72.2 million to $1.09 billion, pushed by sturdy mortgage originations. Distributable revenue held regular at $17.7 million ($0.21 per share), and dividends remained at $0.17 per share. Decrease rates of interest supported a wholesome web curiosity margin, whereas the corporate reported a modest restoration from a resolved staged mortgage however took an Anticipated Credit score Loss on two Calgary workplace loans, lowering web revenue to $2.4 million.

For the complete 12 months, web funding revenue totaled $104.3 million, down from 2023’s peak attributable to falling charges. Distributable revenue was $64.9 million ($0.78 per share) with an 88.3% payout ratio. Web revenue earlier than ECL was $62.3 million; after ECL, it was $46.2 million. The portfolio remained conservatively positioned, with 89.6% in first mortgages and a mean loan-to-value ratio of 63.3%.

CEO Blair Tamblyn highlighted sturdy This autumn originations and a optimistic market outlook. The corporate expects staged mortgage resolutions to proceed enhancing in 2025 and anticipates secure efficiency from its post-2022 mortgage e-book, which displays present market circumstances.

Supply: Investor Presentation

Progress Prospects

Timbercreek Monetary pursues development by lending funds to new clients at engaging rates of interest. It makes an attempt to lend funds towards income-producing properties to make sure that its loans will probably be serviced with none points.

Sadly, that is simpler stated than carried out. To make sure, the corporate has didn’t develop its earnings per share over the past seven years. The uninspiring efficiency has partly resulted from the devaluation of the Canadian greenback vs. the USD. U.S. traders needs to be conscious that the fluctuation of the change fee between these two currencies considerably impacts the earnings and dividends of Timbercreek Monetary in U.S. {dollars}.

Even when the devaluation of the Canadian greenback is taken into consideration, Timbercreek Monetary nonetheless has a poor efficiency file over the past seven years, because it has hardly grown its backside line. Due to this fact, it’s prudent for traders to be conservative of their development expectations.

Given the considerably unstable efficiency file of Timbercreek Monetary and the sensitivity of its earnings to fluctuations in change charges, we anticipate roughly flat earnings per share over the subsequent 5 years.

Dividend & Valuation Evaluation

Timbercreek Monetary is presently providing an exceptionally excessive dividend yield of 9.9%, which is greater than six occasions the yield of the S&P 500. The inventory is thus an fascinating candidate for income-oriented traders, however they need to remember that the dividend is much from secure attributable to its sensitivity to the aforementioned fluctuations in forex change charges.

Furthermore, Timbercreek Monetary presently has a payout ratio of 139%, which is unsustainable in the long term and doesn’t present a margin of security. Moreover, the corporate is delicate to the underlying financial circumstances. In consequence, at any time when it faces a possible recession, it might reduce its dividend.

It is usually necessary to notice that Timbercreek Monetary is delicate to the yield curve. When the chance of an upcoming recession will increase, short-term rates of interest exceed long-term rates of interest; in such a case, the revenue margin of Timbercreek Monetary on new loans is basically eradicated. That is exactly what the corporate is experiencing proper now.

In reference to the valuation, Timbercreek Monetary is presently buying and selling for 12.1 occasions its earnings per share within the final 12 months. Given the corporate’s unstable efficiency file, we assume a good price-to-earnings ratio of 12.0 for the inventory. Due to this fact, the present earnings a number of is marginally increased than our assumed truthful price-to-earnings ratio. If the inventory trades at its truthful valuation stage in 5 years, it can lower a marginal 0.2% annualized headwind in its returns.

Contemplating the flat earnings per share over the subsequent 5 years, the 9.9% present dividend yield, and a 0.2% annualized compression of the valuation stage, Timbercreek Monetary may supply a mean annual whole return of 9.7% over the subsequent 5 years. It is a respectable anticipated return, however we might require the next return to advocate shopping for this unstable inventory. Due to this fact, traders ought to watch for a considerably decrease entry level.

Last Ideas

Timbercreek Monetary presents an exceptionally excessive dividend yield of 9.9% and pays its dividends month-to-month, which can entice some income-oriented traders.

Nevertheless, the corporate has a payout ratio of 139%, which makes it weak to a possible recession, in addition to the inversion of the yield curve. Due to this fact, the dividend of Timbercreek Monetary is much from secure.

Furthermore, Timbercreek Monetary is characterised by extraordinarily low buying and selling quantity. Which means that it’s onerous to determine or promote a big place on this inventory.

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