| Danish oil tanker company Torm (Nasdaq: TRMD) pays a juicy 9% yield, so it's obvious why income investors would be attracted to the stock. But they may want to have the Dramamine nearby. The 136-year-old company saw its free cash flow decline last year from $295 million to $244 million. It paid out $553 million in dividends for a deeply concerning 226% payout ratio. In other words, for every $1 in free cash flow it took in, Torm paid out $2.26 in dividends. That's insane. This year, free cash flow is projected to grow to $376 million, which is good news, but that's still well below the $553 million it paid in dividends last year (and Wall Street forecasts the dividend payout to be even higher this year). |
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