Blackrock Health Sciences Trust's Dividend Analysis
An In-depth Look at the Dividend Performance and Sustainability
Blackrock Health Sciences Trust (NYSE:BME) recently announced a dividend of $0.21 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 Health Sciences Trust's dividend performance and assess its sustainability.
What Does Blackrock Health Sciences Trust Do?
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Blackrock Health Sciences Trust aims to provide total return through a combination of current income, current gains, and long-term capital appreciation. The Fund invests 80% of its total assets in equity securities of companies engaged in the health sciences and related industries and equity derivatives.
A Glimpse at Blackrock Health Sciences Trust's Dividend History
Blackrock Health Sciences Trust has maintained a consistent dividend payment record since 2007. Dividends are currently distributed on a monthly basis. Below is a chart showing annual Dividends Per Share for tracking historical trends.
Breaking Down Blackrock Health Sciences Trust's Dividend Yield and Growth
As of today, Blackrock Health Sciences Trust currently has a 12-month trailing dividend yield of 6.63% and a 12-month forward dividend yield of 6.63%. This suggests an expectation of same dividend payments over the next 12 months.
Over the past three years, Blackrock Health Sciences Trust's annual dividend growth rate was 2.10%. Extended to a five-year horizon, this rate decreased to 1.10% per year.
Based on Blackrock Health Sciences Trust's dividend yield and five-year growth rate, the 5-year yield on cost of Blackrock Health Sciences Trust stock as of today is approximately 7.00%.
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, Blackrock Health Sciences Trust's dividend payout ratio is 0.74. This may suggest that the company's dividend may not be sustainable.
Blackrock Health Sciences Trust's profitability rank, offers an understanding of the company's earnings prowess relative to its peers. GuruFocus ranks Blackrock Health Sciences Trust's profitability 2 out of 10 as of 2023-06-30, suggesting the dividend may not be sustainable. The company has reported net profit in 5 years out of past 10 years.
Growth Metrics: The Future Outlook
To ensure the sustainability of dividends, a company must have robust growth metrics. Blackrock Health Sciences 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 Blackrock Health Sciences Trust has a consistent dividend payment record and a decent yield, the sustainability of its dividends is questionable. The company's high payout ratio, low profitability rank, and poor growth prospects may pose risks to the continuity of its dividend payments. Therefore, investors should carefully consider these factors 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.
