A Comprehensive Analysis of MGF's Dividend Performance and Sustainability
MFS Government Markets Income Trust (MGF, Financial) recently announced a dividend of $0.02 per share, payable on 2023-09-29, with the ex-dividend date set for 2023-09-12. As investors anticipate this upcoming payment, it is crucial to delve into the company's dividend history, yield, and growth rates. Using the data from GuruFocus, let's explore MFS Government Markets Income Trust's dividend performance and assess its sustainability.
Introduction to MFS Government Markets Income Trust
MFS Government Markets Income Trust is a U.S.-based diversified, closed-end management investment company. Its primary objective is to seek high current income. The fund invests a majority of its net assets, including borrowings for investment purposes, in U.S. and foreign government securities. The trust mainly invests in investment-grade debt instruments across various sectors, including automotive, chemicals, computer software, consumer products, insurance, and others.
Tracing MFS Government Markets Income Trust's Dividend History
MFS Government Markets Income Trust has upheld a consistent dividend payment record since 1988, distributing dividends on a monthly basis. The chart below showcases the annual Dividends Per Share for tracking historical trends.
Dissecting MFS Government Markets Income Trust's Dividend Yield and Growth
As of today, MFS Government Markets Income Trust has a 12-month trailing dividend yield of 8.18% and a 12-month forward dividend yield of 8.10%. This indicates an expectation of decreased dividend payments over the next 12 months.
Over the past three years, MFS Government Markets Income Trust's annual dividend growth rate was -6.60%. Extended to a five-year horizon, this rate increased to -4.80% per year. Based on MFS Government Markets Income Trust's dividend yield and five-year growth rate, the 5-year yield on cost of MGF stock as of today is approximately 6.40%.
Assessing Dividend Sustainability: Payout Ratio and Profitability
To gauge the sustainability of the dividend, it's essential to examine the company's payout ratio. The dividend payout ratio reveals the portion of earnings the company distributes as dividends. A lower ratio indicates that the company retains a significant part of its earnings, ensuring funds for future growth and unexpected downturns. As of 2023-05-31, MFS Government Markets Income Trust's dividend payout ratio is 0.00.
MFS Government Markets Income Trust's profitability rank, as per GuruFocus, is 2 out of 10 as of 2023-05-31. This suggests the dividend may not be sustainable, given that the company has reported net profit in only 3 out of the past 10 years.
Examining Growth Metrics: The Future Outlook
For dividends to be sustainable, a company must demonstrate robust growth metrics. MFS Government Markets Income Trust's growth rank of 2 out of 10 indicates poor growth prospects, suggesting that the dividend may not be sustainable in the long run.
Conclusion
While MFS Government Markets Income Trust has a history of consistent dividend payments, its negative dividend growth rate, low profitability rank, and weak growth metrics raise questions about the sustainability of its dividends. Investors should consider these factors before making investment decisions. GuruFocus Premium users can screen for high-dividend yield stocks using the High Dividend Yield Screener.
