Assessing the Sustainability of Aberdeen Asia-pacific Income Fund Inc's Dividends
Aberdeen Asia-pacific Income Fund Inc (FAX, Financial) recently announced a dividend of $0.03 per share, payable on 2024-01-31, with the ex-dividend date set for 2024-01-23. 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 Aberdeen Asia-pacific Income Fund Inc's dividend performance and assess its sustainability.
Company Overview
Aberdeen Asia-pacific Income Fund Inc is a United States-based closed-end, non-diversified management investment company. Its principal investment objective is to seek current income along with capital appreciation. The fund invests in Asian debt securities, Australian debt securities, European debt securities, and others.
Dividend Payment History
Aberdeen Asia-pacific Income Fund Inc has maintained a consistent dividend payment record since 1988. Dividends are currently distributed on a monthly basis. Below is a chart showing annual Dividends Per Share for tracking historical trends.
Dividend Yield and Growth Rates
As of today, Aberdeen Asia-pacific Income Fund Inc currently has a 12-month trailing dividend yield of 12.35% and a 12-month forward dividend yield of 12.35%. This suggests an expectation of same dividend payments over the next 12 months. Extended to a five-year horizon, this rate decreased to -4.30% per year. Based on Aberdeen Asia-pacific Income Fund Inc's dividend yield and five-year growth rate, the 5-year yield on cost of Aberdeen Asia-pacific Income Fund Inc stock as of today is approximately 9.91%.
Examining Dividend Sustainability
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 2023-10-31, Aberdeen Asia-pacific Income Fund Inc's dividend payout ratio is 1.06, which may suggest that the company's dividend may not be sustainable.
Aberdeen Asia-pacific Income Fund Inc's profitability rank, offers an understanding of the company's earnings prowess relative to its peers. GuruFocus ranks Aberdeen Asia-pacific Income Fund Inc's profitability 4 out of 10 as of 2023-10-31, suggesting the dividend may not be sustainable. The company has reported net profit in 7 years out of the past 10 years.
Future Growth Prospects
To ensure the sustainability of dividends, a company must have robust growth metrics. Aberdeen Asia-pacific Income Fund Inc's growth rank of 4 out of 10 suggests that the company has poor growth prospects and thus, the dividend may not be sustainable. Revenue is the lifeblood of any company, and Aberdeen Asia-pacific Income Fund Inc's revenue per share, combined with the 3-year revenue growth rate, indicates a strong revenue model. Aberdeen Asia-pacific Income Fund Inc's revenue has increased by approximately 35.70% per year on average, a rate that outperforms about 80.62% of global competitors.
The company's 3-year EPS growth rate showcases its capability to grow its earnings, a critical component for sustaining dividends in the long run. During the past three years, Aberdeen Asia-pacific Income Fund Inc's earnings increased by approximately 45.80% per year on average, a rate that outperforms about 84.13% of global competitors.
Investor Considerations
In conclusion, while Aberdeen Asia-pacific Income Fund Inc offers an attractive dividend yield, investors should consider the company's payout ratio, profitability rank, and growth metrics when evaluating the sustainability of its dividends. The historical commitment to dividends is commendable, but future prospects and financial stability will be key to maintaining such payments. Investors may benefit from using tools like the High Dividend Yield Screener available to GuruFocus Premium users to find similar high-yield opportunities. Will Aberdeen Asia-pacific Income Fund Inc's dividends continue to reward investors, or will the company need to adjust its strategy to maintain its payouts? This is a question that merits careful consideration.
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.
