Exploring the Dividend Performance and Sustainability of BlackRock Multi-Sector Income Trust
BlackRock Multi-Sector Income Trust(NYSE:BIT) recently announced a dividend of $0.12 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 Multi-Sector Income Trust's dividend performance and assess its sustainability.
Understanding BlackRock Multi-Sector Income Trust
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BlackRock Multi-Sector Income Trust is a closed-end investment management company. It invests on behalf of its clients. The fund's primary investment objective is to provide a high level of current income, with a secondary objective of capital appreciation. It has investments in various sectors ranging from oil, gas and consumable fuels to biotechnology, aerospace and defense, and diversified financial services, among others.
A Look at BlackRock Multi-Sector Income Trust's Dividend History
BlackRock Multi-Sector Income Trust has maintained a consistent dividend payment record since 2017. Dividends are currently distributed on a monthly basis.
Assessing BlackRock Multi-Sector Income Trust's Dividend Yield and Growth
As of today, BlackRock Multi-Sector Income Trust has a 12-month trailing dividend yield of 10.18% and a 12-month forward dividend yield of 10.18%. This suggests an expectation of same dividend payments over the next 12 months.
Over the past three years, BlackRock Multi-Sector Income Trust's annual dividend growth rate was 1.60%. Extended to a five-year horizon, this rate increased to 44.70% per year. Based on BlackRock Multi-Sector Income Trust's dividend yield and five-year growth rate, the 5-year yield on cost of BlackRock Multi-Sector Income Trust stock as of today is approximately 64.58%.
Is BlackRock Multi-Sector Income Trust's Dividend Sustainable?
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 2023-04-30, BlackRock Multi-Sector Income Trust's dividend payout ratio is 0.00.
BlackRock Multi-Sector Income Trust's profitability rank, offers an understanding of the company's earnings prowess relative to its peers. GuruFocus ranks BlackRock Multi-Sector Income Trust's profitability 2 out of 10 as of 2023-04-30, suggesting the dividend may not be sustainable. The company has reported net profit in 4 years out of past 10 years.
BlackRock Multi-Sector Income Trust's Growth Metrics
To ensure the sustainability of dividends, a company must have robust growth metrics. BlackRock Multi-Sector Income 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.
Revenue is the lifeblood of any company, and BlackRock Multi-Sector Income Trust's revenue per share, combined with the 3-year revenue growth rate, indicates a strong revenue model. BlackRock Multi-Sector Income Trust's revenue has increased by approximately -179.00% per year on average, a rate that underperforms than approximately 99.11% 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, BlackRock Multi-Sector Income Trust's earnings increased by approximately -164.00% per year on average, a rate that underperforms than approximately 97.77% of global competitors.
The Final Word
Based on the analysis, while BlackRock Multi-Sector Income Trust has a commendable dividend history, its growth metrics and profitability rank raise questions about the sustainability of its dividends. The company's low growth rank and profitability rank, coupled with its negative revenue and EPS growth rates, suggest that the company may struggle to sustain its dividends in the long run. Investors should consider these factors when making their investment decisions.
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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.