An In-depth Analysis of the Company's Dividend History, Yield, and Growth
PennantPark Floating Rate Capital Ltd (PFLT, Financial) recently announced a dividend of $0.1 per share, payable on 2023-10-02, with the ex-dividend date set for 2023-09-15. As investors anticipate this upcoming payment, it's crucial to examine the company's dividend history, yield, and growth rates. Using the data from GuruFocus, let's delve into PennantPark Floating Rate Capital Ltd's dividend performance and evaluate its sustainability.
Understanding PennantPark Floating Rate Capital Ltd's Business Model
PennantPark Floating Rate Capital Ltd is a closed-end, externally managed, non-diversified investment company. It aims to generate current income and capital appreciation by investing in Floating Rate Loans and other investments made to U.S. middle-market companies. The company believes that Floating Rate Loans to U.S. middle-market companies offer attractive risk-reward to investors due to the limited amount of capital available for such companies and the potential for rising interest rates. The company generates revenue in the form of interest income on the debt securities and capital gains and dividends.
Reviewing PennantPark Floating Rate Capital Ltd's Dividend History
PennantPark Floating Rate Capital Ltd has maintained a consistent dividend payment record since 2011. Dividends are currently distributed on a monthly basis. The company has increased its dividend each year since 2012, earning it the status of a dividend achiever, a title given to companies that have increased their dividend each year for at least the past 11 years.
Analyzing PennantPark Floating Rate Capital Ltd's Dividend Yield and Growth
As of today, PennantPark Floating Rate Capital Ltd has a 12-month trailing dividend yield of 10.85% and a 12-month forward dividend yield of 11.29%, indicating an expectation of increased dividend payments over the next 12 months. Over the past decade, the company's annual dividends per share growth rate is 1.60%. Based on the company's dividend yield and five-year growth rate, the 5-year yield on cost of PennantPark Floating Rate Capital Ltd stock as of today is approximately 10.85%.
Assessing Dividend Sustainability: Payout Ratio and Profitability
To evaluate the sustainability of the dividend, one must consider the company's payout ratio. The dividend payout ratio reflects the portion of earnings the company distributes as dividends. A lower ratio suggests that the company retains a significant part of its earnings, thereby ensuring the availability of funds for future growth and unexpected downturns. As of 2023-06-30, PennantPark Floating Rate Capital Ltd's dividend payout ratio is 0.00.
PennantPark Floating Rate Capital Ltd's profitability rank, as of 2023-06-30, is 4 out of 10, suggesting that the dividend may not be sustainable. However, the company has reported positive net income for each year over the past decade, further reinforcing its high profitability.
Evaluating Growth Metrics for Future Outlook
For dividends to be sustainable, a company must have robust growth metrics. PennantPark Floating Rate Capital Ltd's growth rank of 4 out of 10 suggests poor growth prospects, which may impact dividend sustainability. The company's revenue per share and 3-year revenue growth rate indicate a strong revenue model, despite an average annual increase of approximately -18.00%, a rate that underperforms approximately 75.53% of global competitors. The company's 3-year EPS growth rate of -34.90% also underperforms approximately 84.01% of global competitors. Lastly, the company's 5-year EBITDA growth rate of -28.00% underperforms approximately 95.73% of global competitors.
Concluding Thoughts
While PennantPark Floating Rate Capital Ltd has a commendable history of consistent and growing dividends, the sustainability of these dividends is questionable given the company's current payout ratio, profitability rank, and growth metrics. Investors must carefully consider these factors before making investment decisions. GuruFocus Premium users can screen for high-dividend yield stocks using the High Dividend Yield Screener.
