A deep dive into the dividend history, yield, growth rates, and more of Prospect Capital Corp (PSEC, Financial)
Prospect Capital Corp (PSEC) recently announced a dividend of $0.06 per share, payable on 2023-11-20, with the ex-dividend date set for 2023-10-26. As investors anticipate this forthcoming payment, it is also critical to examine the company's dividend history, yield, and growth rates. Let's delve into Prospect Capital Corp's dividend performance and assess its sustainability by leveraging data from GuruFocus.
Understanding Prospect Capital Corp's Business
Prospect Capital Corp is a US-based closed-end investment company. The firm aims to generate both current income and long-term capital appreciation through debt and equity investments. It primarily invests in senior and subordinated debt and equity of private companies for various purposes, including acquisitions, divestitures, growth, development, recapitalizations, and more.
Prospect Capital Corp's Dividend History: A Snapshot
Prospect Capital Corp has upheld a consistent dividend payment record since 2004, with dividends currently distributed monthly. The chart below illustrates the annual Dividends Per Share to track historical trends.
Prospect Capital Corp's Dividend Yield and Growth: A Closer Look
As of today, Prospect Capital Corp boasts a 12-month trailing dividend yield and a 12-month forward dividend yield of 11.70%, indicating an expectation of consistent dividend payments over the next 12 months. Over a five-year horizon, this rate has decreased to -0.90% per year. Over the past decade, the company's annual dividends per share growth rate was -6.90%. The 5-year yield on cost of Prospect Capital Corp stock as of today is approximately 11.18%.
Is Prospect Capital Corp's Dividend Sustainable? Evaluating Payout Ratio and Profitability
The sustainability of a dividend is evaluated by examining the company's payout ratio. The dividend payout ratio gives 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, ensuring the availability of funds for future growth and unexpected downturns. As of 2023-06-30, Prospect Capital Corp's dividend payout ratio is 0.00.
Prospect Capital Corp's profitability rank is 4 out of 10 as of 2023-06-30, suggesting that the dividend may not be sustainable. The company has reported net profit in 8 out of the past 10 years.
Prospect Capital Corp's Growth Metrics and Future Outlook
For dividends to be sustainable, a company must have robust growth metrics. Prospect Capital Corp's growth rank of 4 out of 10 implies poor growth prospects, thus, the dividend may not be sustainable. The company's 3-year EPS growth rate highlights its capability to grow its earnings, a critical component for sustaining dividends in the long run. Over the past three years, Prospect Capital Corp's earnings have increased by approximately -120.70% per year on average, outperforming approximately 4.02% of global competitors.
Conclusion
While Prospect Capital Corp has a commendable history of consistent dividend payments, its current growth metrics and profitability rank suggest potential challenges in sustaining these dividends. Investors must therefore exercise caution and closely monitor the company's performance. GuruFocus Premium users can screen for high-dividend yield stocks using the High Dividend Yield Screener.
