Sure, okay, here it is — so, Torm, right? That oil tanker company. It’s been around forever—like 136 years, which sounds almost ancient. But wait, here’s the kicker: Torm is tossing out a 9% yield. Yep, you heard that right. I mean, it’s pretty obvious why folks who like to pocket some cash might find this stock appealing. But seriously, might wanna keep some Dramamine nearby just in case.

So, last year, their free cash flow kinda took a nosedive—from $295 million down to $244 million. And oh man, they shelled out $553 million in dividends. I mean, what? That’s a whopping 226% payout ratio. No joke, for every dollar they had flowing in, they paid out $2.26. Who even does that?

Now, the buzz is that this year’s cash flow is supposed to climb to $376 million. Sounds great, right? Except, well, they still gotta outdo that $553 million from last year somehow. And apparently, the smart folks on Wall Street think the dividend payout might be even bigger this year. Go figure.

Get this—the dividends have been all over the place. 2016, 2017, and 2020, they did these semiannual payouts. But nada in 2018, 2019, or 2021. Since 2022, they switched to quarterly dividends and have already slashed the payout six times. Rollercoaster much?

Two big snags here with Torm’s dividend situation. First, that variable dividend policy. In theory, not the worst thing, but it means the dividend’s basically like a yo-yo. Can’t count on it being steady each quarter.

Second, it seems like they can’t really foot their own dividend bill. They talk about a payout ratio of 64% for the first quarter, which might make sense if you squint a little and focus just on earnings per share. But listen, earnings aren’t the be-all-end-all. They roll in all this noncash stuff like depreciation, stock options, and sales that aren’t even paid up yet. Cash flow’s what really counts ‘cause, guess what, you can’t pay dividends with IOUs.

With Torm’s dividend way above its cash flow and a mixed-bag policy, expect more cuts down the line. Maybe, maybe it’ll go up a bit next year. But, let’s be honest—it’ll probably drop again.

So, what do you think? Who’s dividend safety got your curiosity piqued next? Drop me a ticker in the comments. And, hey, check out if we’ve covered your fave stock lately by hitting “Search” on our website. Just individual stocks though—none of those funds.

Oh, by the way, that Dividend Safety Rating? Yeah, it’s an F.