Monthly Dividend Stock In Focus: Timbercreek Financial Corporation

Updated on April 30th, 2025 by Felix Martinez

Timbercreek Financial Corporation (TBCRF) has two appealing investment characteristics:

#1: It is a high-yield stock based on its 9.9% dividend yield.Related: List of 5%+ yielding stocks.#2: It pays dividends monthly instead of quarterly.Related: List of monthly dividend stocks

You can download our full Excel spreadsheet of all monthly dividend stocks (along with metrics that matter like dividend yield and payout ratio) by clicking on the link below:

The combination of a high yield and a monthly dividend renders Timbercreek Financial appealing to individual investors.

But there’s more to the company than just these factors. Keep reading this article to learn more about Timbercreek Financial.

Business Overview

Timbercreek Financial is a mortgage investment company that provides shorter-duration structured financing solutions to commercial real estate investors in Canada. The company focuses on lending against income-producing real estate properties, such as multi-residential, retail, and office properties in urban markets. Timbercreek Financial was founded in 2016 and is headquartered in Toronto, Canada.

Timbercreek Financial employs a service-oriented business approach, offering borrowers faster execution and more flexible terms compared to Canadian financial institutions. This is one of the reasons why its customers resort to Timbercreek Financial instead of using traditional banking channels.

Approximately 86.5% of Timbercreek Financial’s properties in the portfolio are income-producing.

Source: Investor Presentation

This feature is paramount, as it renders the loans provided by the company much more reliable. Moreover, 97% of the total portfolio is invested in urban markets, which are reliable.

Due to the nature of its business, Timbercreek Financial is sensitive to the underlying economic conditions. Some of its customers cannot borrow funds through traditional banking channels, and therefore, they are often vulnerable during economic downturns.

Indeed, Timbercreek Financial was hurt by the fierce recession caused by the coronavirus crisis. In 2020, the company incurred a 39% decrease in its earnings per share, from $0.51 to $0.31. Fortunately, the recession proved short-lived thanks to the unprecedented fiscal stimulus packages offered by the Canadian government in response to the pandemic. As a result, Timbercreek Financial has fully recovered from this crisis.

In Q4 2024, Timbercreek Financial grew its net mortgage investment portfolio by $72.2 million to $1.09 billion, driven by strong loan originations. Distributable income held steady at $17.7 million ($0.21 per share), and dividends remained at $0.17 per share. Lower interest rates supported a healthy net interest margin, while the company reported a modest recovery from a resolved staged loan but took an Expected Credit Loss on two Calgary office loans, reducing net income to $2.4 million.

For the full year, net investment income totaled $104.3 million, down from 2023’s peak due to falling rates. Distributable income was $64.9 million ($0.78 per share) with an 88.3% payout ratio. Net income before ECL was $62.3 million; after ECL, it was $46.2 million. The portfolio remained conservatively positioned, with 89.6% in first mortgages and an average loan-to-value ratio of 63.3%.

CEO Blair Tamblyn highlighted strong Q4 originations and a positive market outlook. The company expects staged loan resolutions to continue improving in 2025 and anticipates stable performance from its post-2022 loan book, which reflects current market conditions.

Source: Investor Presentation

Growth Prospects

Timbercreek Financial pursues growth by lending funds to new customers at attractive interest rates. It attempts to lend funds against income-producing properties to ensure that its loans will be serviced without any issues.

Unfortunately, this is easier said than done. To be sure, the company has failed to grow its earnings per share over the last seven years. The uninspiring performance has partly resulted from the devaluation of the Canadian dollar vs. the USD. U.S. investors should be aware that the fluctuation of the exchange rate between these two currencies significantly affects the earnings and dividends of Timbercreek Financial in U.S. dollars.

Even when the devaluation of the Canadian dollar is taken into account, Timbercreek Financial still has a poor performance record over the last seven years, as it has hardly grown its bottom line. Therefore, it is prudent for investors to be conservative in their growth expectations.

Given the somewhat volatile performance record of Timbercreek Financial and the sensitivity of its earnings to fluctuations in exchange rates, we anticipate approximately flat earnings per share over the next five years.

Dividend & Valuation Analysis

Timbercreek Financial is currently offering an exceptionally high dividend yield of 9.9%, which is more than six times the yield of the S&P 500. The stock is thus an interesting candidate for income-oriented investors, but they should be aware that the dividend is far from safe due to its sensitivity to the aforementioned fluctuations in currency exchange rates.

Moreover, Timbercreek Financial currently has a payout ratio of 139%, which is unsustainable in the long run and does not provide a margin of safety. Furthermore, the company is sensitive to the underlying economic conditions. As a result, whenever it faces a potential recession, it may cut its dividend.

It is also important to note that Timbercreek Financial is sensitive to the yield curve. When the risk of an upcoming recession increases, short-term interest rates exceed long-term interest rates; in such a case, the profit margin of Timbercreek Financial on new loans is essentially eliminated. This is precisely what the company is experiencing right now.

In reference to the valuation, Timbercreek Financial is currently trading for 12.1 times its earnings per share in the last 12 months. Given the company’s volatile performance record, we assume a fair price-to-earnings ratio of 12.0 for the stock. Therefore, the current earnings multiple is marginally higher than our assumed fair price-to-earnings ratio. If the stock trades at its fair valuation level in five years, it will decrease a marginal 0.2% annualized headwind in its returns.

Considering the flat earnings per share over the next five years, the 9.9% current dividend yield, and a 0.2% annualized compression of the valuation level, Timbercreek Financial could offer an average annual total return of 9.7% over the next five years. This is a decent expected return, but we would require a higher return to recommend buying this volatile stock. Therefore, investors should wait for a significantly lower entry point.

Final Thoughts

Timbercreek Financial offers an exceptionally high dividend yield of 9.9% and pays its dividends monthly, which may entice some income-oriented investors.

However, the company has a payout ratio of 139%, which makes it vulnerable to a potential recession, as well as the inversion of the yield curve. Therefore, the dividend of Timbercreek Financial is far from safe.

Moreover, Timbercreek Financial is characterized by extremely low trading volume. This means that it is hard to establish or sell a large position in this stock.

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