BNY Mellon High Yield Strategies Fund's Dividend Analysis
Dissecting the Dividend Dynamics of DHF
BNY Mellon High Yield Strategies Fund (NYSE:DHF) recently announced a dividend of $0.02 per share, payable on 2024-01-11, with the ex-dividend date set for 2023-12-26. 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 BNY Mellon High Yield Strategies Fund's dividend performance and assess its sustainability.
What Does BNY Mellon High Yield Strategies Fund Do?
BNY Mellon High Yield Strategies Fund is a diversified, closed-end management investment company. The fund's primary investment objective is to seek high current income and its secondary objective is capital appreciation. It invests primarily in fixed-income securities of below-investment-grade credit quality.
A Glimpse at BNY Mellon High Yield Strategies Fund's Dividend History
BNY Mellon High Yield Strategies Fund has maintained a consistent dividend payment record since 1998. Dividends are currently distributed on a monthly basis. Below is a chart showing annual Dividends Per Share for tracking historical trends.
Breaking Down BNY Mellon High Yield Strategies Fund's Dividend Yield and Growth
As of today, BNY Mellon High Yield Strategies Fund currently has a 12-month trailing dividend yield of 7.76% and a 12-month forward dividend yield of 7.76%. This suggests an expectation of the same dividend payments over the next 12 months.
Over the past three years, BNY Mellon High Yield Strategies Fund's annual dividend growth rate was -6.90%. Extended to a five-year horizon, this rate increased to -6.40% per year. Based on BNY Mellon High Yield Strategies Fund's dividend yield and five-year growth rate, the 5-year yield on cost of BNY Mellon High Yield Strategies Fund stock as of today is approximately 5.57%.
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 2023-09-30, BNY Mellon High Yield Strategies Fund's dividend payout ratio is 0.58.
BNY Mellon High Yield Strategies Fund's profitability rank, offers an understanding of the company's earnings prowess relative to its peers. GuruFocus ranks BNY Mellon High Yield Strategies Fund's profitability 2 out of 10 as of 2023-09-30, suggesting the dividend may not be sustainable. The company has reported net profit in 3 years out of the past 10 years.
Growth Metrics: The Future Outlook
To ensure the sustainability of dividends, a company must have robust growth metrics. BNY Mellon High Yield Strategies Fund'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 BNY Mellon High Yield Strategies Fund's revenue per share, combined with the 3-year revenue growth rate, indicates a strong revenue model. BNY Mellon High Yield Strategies Fund's revenue has increased by approximately 15.10% per year on average, a rate that outperforms approximately 64.65% 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, BNY Mellon High Yield Strategies Fund's earnings increased by approximately 14.90% per year on average, a rate that outperforms approximately 57.68% of global competitors.
Next Steps in Dividend Evaluation
In conclusion, while BNY Mellon High Yield Strategies Fund offers a high dividend yield, the underlying factors such as the negative dividend growth rate, low profitability rank, and moderate growth rank raise concerns about the long-term sustainability of its dividend payments. However, the fund's solid revenue and earnings growth rates suggest potential for future improvement. Investors should weigh these elements and monitor upcoming financial reports to make informed decisions. For those seeking to diversify their portfolio with high-dividend yield stocks, GuruFocus Premium offers a High Dividend Yield Screener for further research.
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.
