Yahoo Finance PennantPark Floating Rate Capital Ltd's Dividend Analysis
Examining the Dividend Profile of PennantPark Floating Rate Capital Ltd (NYSE:PFLT)
PennantPark Floating Rate Capital Ltd (NYSE:PFLT) recently announced a dividend of $0.10 per share, payable on April 1, 2024, with the ex-dividend date set for March 15, 2024. 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 PennantPark Floating Rate Capital Ltd's dividend performance and assess its sustainability.
What Does PennantPark Floating Rate Capital Ltd Do?
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PennantPark Floating Rate Capital Ltd is a closed-end, externally managed, non-diversified investment company. Its investment objectives are 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 dividends.
A Glimpse at PennantPark Floating Rate Capital Ltd's Dividend History
PennantPark Floating Rate Capital Ltd has maintained a consistent dividend payment record since 2011, with dividends currently distributed on a monthly basis. The company has increased its dividend each year since 2012, earning it the title of a dividend achiever, a distinction given to companies that have raised their dividend annually for at least the past 12 years. Below is a chart showing annual Dividends Per Share to track historical trends.
Breaking Down PennantPark Floating Rate Capital Ltd's Dividend Yield and Growth
As of today, PennantPark Floating Rate Capital Ltd currently has a 12-month trailing dividend yield of 10.95% and a 12-month forward dividend yield of 11.01%, indicating an expectation of increased dividend payments over the next 12 months. Over the past three years, PennantPark Floating Rate Capital Ltd's annual dividend growth rate was 1.30%. This rate decreased to 0.60% per year over a five-year horizon. Over the past decade, the annual dividends per share growth rate stands at 0.90%. Based on the 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 11.28%.
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. As of December 31, 2023, PennantPark Floating Rate Capital Ltd's dividend payout ratio is 1.08, which may suggest that the company's dividend may not be sustainable. The company's profitability rank is 4 out of 10, indicating challenges in sustaining the dividend despite reporting positive net income consistently over the past decade.
Growth Metrics: The Future Outlook
Robust growth metrics are essential for the sustainability of dividends. PennantPark Floating Rate Capital Ltd's growth rank of 4 out of 10 indicates poor growth prospects, which may affect dividend sustainability. However, the company's strong revenue model is reflected in its revenue per share and 3-year revenue growth rate, with an average annual increase of 12.30%, outperforming approximately 57.45% of global competitors. The 3-year EPS growth rate has also been impressive, averaging an increase of 17.90% per year, outperforming about 60.96% of global competitors. However, the 5-year EBITDA growth rate of -9.10% is less competitive, outperforming only about 16.19% of global competitors.
Next Steps
In conclusion, while PennantPark Floating Rate Capital Ltd has demonstrated a commitment to paying dividends, its growth metrics and payout ratio present a complex picture for its dividend sustainability. Value investors should weigh the high dividend yield against the potential risks associated with the company's growth prospects and profitability rank. As with any investment decision, it's crucial to consider both the opportunities and the challenges that lie ahead. For those seeking to expand their portfolio with high-dividend yield stocks, GuruFocus Premium offers a High Dividend Yield Screener to help identify potential investment opportunities.
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.
This article first appeared on GuruFocus.
