An Insightful Examination of MFV's Dividend Performance and Sustainability
MFS Special Value Trust (MFV, Financial) recently announced a dividend of $0.04 per share, payable on 2023-10-31, with the ex-dividend date set for 2023-10-17. 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 look into MFS Special Value Trust's dividend performance and assess its sustainability.
What Does MFS Special Value Trust Do?
MFS Special Value Trust is a diversified closed-end management investment company. Its investment objective is to seek high current income but may also consider capital appreciation. The majority of the fund's assets are invested in debt instruments, including below-investment-grade quality debt instruments. In addition, a portion of the fund's assets is invested in equity securities. Its portfolio of investments comprises investments in different sectors such as aerospace, broadcasting, business services, conglomerates, major banks, insurance, and other sectors.
A Glimpse at MFS Special Value Trust's Dividend History
MFS Special Value Trust has maintained a consistent dividend payment record since 1994. Dividends are currently distributed on a monthly basis. Below is a chart showing annual Dividends Per Share for tracking historical trends.
Breaking Down MFS Special Value Trust's Dividend Yield and Growth
As of today, MFS Special Value Trust currently has a 12-month trailing dividend yield of 11.41% and a 12-month forward dividend yield of 11.37%. This suggests an expectation of decrease dividend payments over the next 12 months.
Over the past three years, MFS Special Value Trust's annual dividend growth rate was -3.50%. Extended to a five-year horizon, this rate increased to -3.30% per year.
Based on MFS Special Value Trust's dividend yield and five-year growth rate, the 5-year yield on cost of MFS Special Value Trust stock as of today is approximately 9.65%.
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 2023-04-30, MFS Special Value Trust's dividend payout ratio is 6.50. This may suggest that the company's dividend may not be sustainable.
MFS Special Value Trust's profitability rank, offers an understanding of the company's earnings prowess relative to its peers. GuruFocus ranks MFS Special Value Trust's profitability 2 out of 10 as of 2023-04-30, 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. MFS Special Value Trust'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 MFS Special Value Trust has a long history of dividend payments, its current dividend growth rate, payout ratio, profitability, and growth metrics raise questions about the sustainability of its dividends. Investors should consider these factors carefully when making investment decisions. GuruFocus Premium users can screen for high-dividend yield stocks using the High Dividend Yield Screener.
This article, generated by GuruFocus, is designed to provide general insights and is not tailored financial advice. Our commentary is rooted in historical data and analyst projections, utilizing an impartial methodology, and is not intended to serve as specific investment guidance. It does not formulate a recommendation to purchase or divest any stock and does not consider individual investment objectives or financial circumstances. Our objective is to deliver long-term, fundamental data-driven analysis. Be aware that our analysis might not incorporate the most recent, price-sensitive company announcements or qualitative information. GuruFocus holds no position in the stocks mentioned herein.
