ArrowMark Financial Corp's Dividend Analysis
Insights into dividend history, growth, and sustainability
ArrowMark Financial Corp (NASDAQ:BANX) recently announced a dividend of $0.42 per share, payable on 2023-10-27, with the ex-dividend date set for 2023-10-19. 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 ArrowMark Financial Corp's dividend performance and assess its sustainability.
What Does ArrowMark Financial Corp Do?
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ArrowMark Financial Corp is a non-diversified, closed-end management investment company. Its objective is to provide stockholders with current income, and to a lesser extent capital appreciation. The company's investment in various portfolios such as debt securities, trust preferred securities, preferred shares of credit securitization, preferred securities, convertible preferred stock, exchange-traded fund, limited partnership interest, and money market fund.
A Glimpse at ArrowMark Financial Corp's Dividend History
ArrowMark Financial Corp has maintained a consistent dividend payment record since 2013. Dividends are currently distributed on a quarterly basis. Below is a chart showing annual Dividends Per Share for tracking historical trends.
Breaking Down ArrowMark Financial Corp's Dividend Yield and Growth
As of today, ArrowMark Financial Corp currently has a 12-month trailing dividend yield of 8.96% and a 12-month forward dividend yield of 9.99%. This suggests an expectation of increased dividend payments over the next 12 months.
Over the past three years, ArrowMark Financial Corp's annual dividend growth rate was 0.90%. Extended to a five-year horizon, this rate decreased to 0.60% per year.
Based on ArrowMark Financial Corp's dividend yield and five-year growth rate, the 5-year yield on cost of ArrowMark Financial Corp stock as of today is approximately 9.23%.
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, ArrowMark Financial Corp's dividend payout ratio is 0.78. And this may suggest that the company's dividend may not be sustainable.
ArrowMark Financial Corp's profitability rank, offers an understanding of the company's earnings prowess relative to its peers. GuruFocus ranks ArrowMark Financial Corp's profitability 4 out of 10 as of 2023-06-30, suggesting the dividend may not be sustainable. The company has reported net profit in 9 years out of past 10 years.
Growth Metrics: The Future Outlook
To ensure the sustainability of dividends, a company must have robust growth metrics. ArrowMark Financial Corp'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 ArrowMark Financial Corp's revenue per share, combined with the 3-year revenue growth rate, indicates a strong revenue model. ArrowMark Financial Corp's revenue has increased by approximately -20.70% per year on average, a rate that underperforms than approximately 78.79% 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, ArrowMark Financial Corp's earnings increased by approximately -26.90% per year on average, a rate that underperforms than approximately 79.88% of global competitors.
Lastly, the company's 5-year EBITDA growth rate of -11.70%, which underperforms than approximately 86.77% of global competitors.
Next Steps
In conclusion, while ArrowMark Financial Corp has a history of consistent dividend payments, the sustainability of these dividends is questionable given the company's payout ratio, profitability rank, and growth metrics. Investors should keep a close eye on these factors when considering future investments in ArrowMark Financial Corp. Remember, dividends are only one aspect of a company's financial health, and a comprehensive understanding of all the metrics is crucial for informed decision-making.
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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.
