An assessment of the sustainability of the upcoming dividend
Blackstone Strategic Credit Fund(BGB, Financial) recently announced a dividend of $0.1 per share, payable on 2023-09-29, with the ex-dividend date set for 2023-09-21. As investors look forward to this upcoming payment, the spotlight also shines on the company's dividend history, yield, and growth rates. Using the data from GuruFocus, let's deep dive into Blackstone Strategic Credit Funds dividend performance and assess its sustainability.
What Does Blackstone Strategic Credit Fund Do?
Blackstone Strategic Credit Fund is a closed-end term fund. Its primary investment objective is to seek high current income. The secondary objective of the fund is to seek the preservation of capital. It invests primarily in diversified portfolios or loans and other fixed-income instruments of predominantly US Corporate issuers, including first? and second?lien loans (Senior Secured Loans) and high-yield corporate bonds of varying maturities.
A Glimpse at Blackstone Strategic Credit Fund's Dividend History
Blackstone Strategic Credit Fund has maintained a consistent dividend payment record since 2012. Dividends are currently distributed on a monthly basis. Below is a chart showing annual Dividends Per Share for tracking historical trends.
Breaking Down Blackstone Strategic Credit Fund's Dividend Yield and Growth
As of today, Blackstone Strategic Credit Fund currently has a 12-month trailing dividend yield of 9.12% and a 12-month forward dividend yield of 10.83%. This suggests an expectation of increase dividend payments over the next 12 months.
Over the past three years, Blackstone Strategic Credit Fund's annual dividend growth rate was -16.20%. Extended to a five-year horizon, this rate increased to -10.30% per year.
Based on Blackstone Strategic Credit Fund's dividend yield and five-year growth rate, the 5-year yield on cost of Blackstone Strategic Credit Fund stock as of today is approximately 5.30%.
The Sustainability Question: Payout Ratio and Profitability
To assess the sustainability of the dividend, one needs to evaluate the company's payout ratio. The dividend payout ratio provides insights into 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, Blackstone Strategic Credit Fund's dividend payout ratio is 1.12. This may suggest that the company's dividend may not be sustainable.
Blackstone Strategic Credit Fund's profitability rank, offers an understanding of the company's earnings prowess relative to its peers. GuruFocus ranks Blackstone Strategic Credit Fund's profitability 2 out of 10 as of 2023-06-30, suggesting the dividend may not be sustainable. The company has reported net profit in 4 years out of past 10 years.
Growth Metrics: The Future Outlook
To ensure the sustainability of dividends, a company must have robust growth metrics. Blackstone Strategic Credit Fund's growth rank of 2 out of 10 suggests that the company has poor growth prospects and thus, the dividend may not be sustainable.
Next Steps
In conclusion, while Blackstone Strategic Credit Fund's dividend payments have been consistent, the negative growth rate, high payout ratio, low profitability, and poor growth metrics raise concerns about the sustainability of future 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.
