BlackRock Resources & Commodities Strategy Trust's Dividend Analysis
Assessing the Sustainability and Prospects of BCX's Dividend
BlackRock Resources & Commodities Strategy Trust (NYSE:BCX) recently announced a dividend of $0.05 per share, payable on 2023-10-31, with the ex-dividend date set for 2023-10-13. This news has drawn attention to the company's dividend history, yield, and growth rates. Using the data from GuruFocus, this article will delve into BCX's dividend performance and assess its sustainability.
Understanding BlackRock Resources & Commodities Strategy Trust
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BlackRock Resources & Commodities Strategy Trust operates as an investment trust. Its primary objective is to seek high current income and current gains, with a secondary objective of capital appreciation. The company invests at least 80% of its total assets in equity securities issued by commodity or natural resources companies, derivatives with exposure to commodity or natural resources companies, or investments in securities and derivatives linked to the underlying price movement of commodities or natural resources.
Reviewing BCX's Dividend History
BlackRock Resources & Commodities Strategy Trust has maintained a consistent dividend payment record since 2017, with dividends currently distributed on a monthly basis. Below is a chart showing annual Dividends Per Share for tracking historical trends.
Examining BCX's Dividend Yield and Growth
As of today, BlackRock Resources & Commodities Strategy Trust currently has a 12-month trailing dividend yield of 6.90% and a 12-month forward dividend yield of 6.90%. This suggests an expectation of same dividend payments over the next 12 months.
Over the past three years, BCX's annual dividend growth rate was -3.20%. However, when extended to a five-year horizon, this rate increased to 17.00% per year. Based on BCX's dividend yield and five-year growth rate, the 5-year yield on cost of BCX stock as of today is approximately 15.13%.
Assessing Dividend Sustainability: 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, BCX's dividend payout ratio is 0.48.
BCX's profitability rank, offers an understanding of the company's earnings prowess relative to its peers. GuruFocus ranks BCX'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 4 years out of past 10 years.
Considering Growth Metrics for BCX's Future Outlook
For a company to sustain dividends, it must have robust growth metrics. BCX's growth rank of 2 out of 10 suggests that the company has poor growth prospects and thus, the dividend may not be sustainable. However, BCX's revenue per share, combined with the 3-year revenue growth rate, indicates a strong revenue model. BCX's revenue has increased by approximately 8.60% per year on average, a rate that outperforms approximately 55.9% of global competitors.
BCX'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, BCX's earnings increased by approximately 8.80% per year on average, a rate that outperforms approximately 52.85% of global competitors.
Concluding Thoughts on BCX's Dividend Performance
While BCX's consistent dividend payments and solid yield are attractive, its low profitability and growth ranks may raise concerns about the sustainability of its dividends. The company's strong revenue growth and EPS growth rate, however, highlight its potential to sustain dividends in the long run. Investors should consider these factors when evaluating BCX's dividend prospects.
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.
