Wednesday, July 24, 2024

An Almost Holy 14.7% Yield

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AN OXFORD CLUB PUBLICATION

Wealthy Retirement

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How Holy Is Trinity Capital's 14.7% Yield?

Marc Lichtenfeld, Chief Income Strategist, The Oxford Club

Marc Lichtenfeld

Investors in Trinity Capital (Nasdaq: TRIN) have gotten used to their dividends steadily increasing.

But can they rely on those payouts, or do they need to say a prayer that the dividend gods will continue to bless them? After all, maintaining a 14.7% yield sometimes requires needs a little divine intervention.

Trinity Capital is a business development company, or BDC, that lends money to venture capital-backed growth companies. It has $1.6 billion in assets under management and 163 investments in its portfolio, including...

  • Technology-enabled lender Accept.inc
  • Cellulosic sugar and ethanol producer Edeniq
  • Online payment processing technology company Verifone.

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Trinity went public in 2021, so it's only been paying a dividend for a few years. But its track record - albeit short - is excellent.

It has raised the dividend 12 times in the past 13 quarters. In fact, the most recent quarter was the first time it did not boost the dividend.

Chart: Trinity's Dividend Growth Has Been Divine
View larger image
 

In 2022 and 2023, the company also paid out several special dividends. The 14.7% yield is only based on the current $0.51 per share quarterly dividend, so if the dividend continues to climb or the company keeps paying special dividends, shareholders could see an even bigger yield.

There's no doubt 14.7% is an eye-popping number.

However, there's one potential problem with Trinity's dividend... and if you've been reading my Safety Net columns for a while, you know it's a big deal.

Here's What I Mean...

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