Some investors rely on dividends for growing their wealth, and if you're one of those dividend sleuths, you might be intrigued to know that TPG Telecom Limited (ASX:TPG) is about to go ex-dividend in just two days. The ex-dividend date generally occurs two days before the record date, which is the day on which shareholders need to be on the company's books in order to receive a dividend. The ex-dividend date is of consequence because whenever a stock is bought or sold, the trade can take two business days or more to settle. Accordingly, TPG Telecom investors that purchase the stock on or after the 4th of September will not receive the dividend, which will be paid on the 3rd of October.

The company's next dividend payment will be AU$0.09 per share, on the back of last year when the company paid a total of AU$0.18 to shareholders. Based on the last year's worth of payments, TPG Telecom has a trailing yield of 3.4% on the current stock price of AU$5.23. We love seeing companies pay a dividend, but it's also important to be sure that laying the golden eggs isn't going to kill our golden goose! So we need to check whether the dividend payments are covered, and if earnings are growing.

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Dividends are usually paid out of company profits, so if a company pays out more than it earned then its dividend is usually at greater risk of being cut. TPG Telecom reported a loss after tax last year, which means it's paying a dividend despite being unprofitable. While this might be a one-off event, this is unlikely to be sustainable in the long term. With the recent loss, it's important to check if the business generated enough cash to pay its dividend. If TPG Telecom didn't generate enough cash to pay the dividend, then it must have either paid from cash in the bank or by borrowing money, neither of which is sustainable in the long term. Fortunately, it paid out only 37% of its free cash flow in the past year.

See our latest analysis for TPG Telecom

Click here to see the company's payout ratio, plus analyst estimates of its future dividends.ASX:TPG Historic Dividend September 1st 2025

Have Earnings And Dividends Been Growing?

When earnings decline, dividend companies become much harder to analyse and own safely. If earnings decline and the company is forced to cut its dividend, investors could watch the value of their investment go up in smoke. TPG Telecom reported a loss last year, and the general trend suggests its earnings have also been declining in recent years, making us wonder if the dividend is at risk.

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The main way most investors will assess a company's dividend prospects is by checking the historical rate of dividend growth. TPG Telecom has delivered an average of 19% per year annual increase in its dividend, based on the past five years of dividend payments.

We update our analysis on TPG Telecom every 24 hours, so you can always get the latest insights on its financial health, here.

The Bottom Line

Has TPG Telecom got what it takes to maintain its dividend payments? We're a bit uncomfortable with it paying a dividend while being loss-making. However, we note that the dividend was covered by cash flow. With the way things are shaping up from a dividend perspective, we'd be inclined to steer clear of TPG Telecom.

So if you're still interested in TPG Telecom despite it's poor dividend qualities, you should be well informed on some of the risks facing this stock. Case in point: We've spotted 1 warning sign for TPG Telecom you should be aware of.

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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.

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