Blackrock Credit Allocation Income Trust's Dividend Analysis
A Comprehensive Review of BTZ's Dividend Performance and Sustainability
Blackrock Credit Allocation Income Trust (NYSE:BTZ) recently announced a dividend of $0.08 per share, payable on 2023-10-31, with the ex-dividend date set for 2023-10-13. 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 delve into Blackrock Credit Allocation Income Trust's dividend performance and assess its sustainability.
A Brief Overview of Blackrock Credit Allocation Income Trust
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Blackrock Credit Allocation Income Trust is a diversified, closed-end Trust engaged in providing investment advisory and risk management solutions. Its investment objective is to seek current income, current gains, and capital appreciation. The company invests at least 80% of its assets in credit-related securities, including, but not limited to, investment-grade corporate bonds, high-yield bonds, bank loans, preferred securities, convertible bonds, or derivatives with similar economic characteristics.
Historical Dividend Performance of Blackrock Credit Allocation Income Trust
Blackrock Credit Allocation Income Trust has maintained a consistent dividend payment record since 2007, with dividends currently distributed on a monthly basis. The chart below shows the annual Dividends Per Share for tracking historical trends.
Blackrock Credit Allocation Income Trust's Dividend Yield and Growth
As of today, Blackrock Credit Allocation Income Trust has a 12-month trailing dividend yield and a 12-month forward dividend yield of 10.36%, suggesting an expectation of same dividend payments over the next 12 months. Over the past three years, the company's annual dividend growth rate was 6.30%, which decreased to 5.20% per year over a five-year horizon. Consequently, the 5-year yield on cost of Blackrock Credit Allocation Income Trust stock is approximately 13.35% as of today.
Assessing Dividend Sustainability: Payout Ratio and Profitability
The sustainability of a dividend can be assessed by evaluating 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, Blackrock Credit Allocation Income Trust's dividend payout ratio is 1.74, suggesting that the company's dividend may not be sustainable.
Blackrock Credit Allocation Income Trust's profitability rank of 2 out of 10 as of 2023-06-30, along with its record of reporting net profit in 4 years out of the past 10 years, further suggests that the dividend may not be sustainable.
Future Outlook: Growth Metrics and Dividend Sustainability
For dividends to be sustainable, a company must have robust growth metrics. Blackrock Credit Allocation Income Trust's growth rank of 2 out of 10 suggests that the company has poor growth prospects, which further implies that the dividend may not be sustainable.
Conclusion
In conclusion, while Blackrock Credit Allocation Income Trust has a strong history of dividend payments and a high yield, its high payout ratio, low profitability rank, and poor growth prospects raise concerns about the sustainability of its dividends. Investors should therefore exercise caution and conduct thorough research before 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.
This article first appeared on GuruFocus.
