Deep Dive into Gladstone Investment Corp's Dividend Performance and Sustainability
A Comprehensive Analysis of GAIN's Dividend History, Yield, Growth, and Future Prospects
Gladstone Investment Corp (NASDAQ:GAIN) recently announced a dividend of $0.08 per share, payable on 2023-09-29, with the ex-dividend date set for 2023-09-20. 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 deep dive into Gladstone Investment Corps dividend performance and assess its sustainability.
Introducing Gladstone Investment Corp
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Gladstone Investment Corp is a business development company. The company's investment objective is to invest in established businesses that will provide stable earnings and cash flow, and provide its stockholders with long-term capital appreciation by investing in equity securities. The company's investment sectors include Business service/distribution, Consumer products, and manufacturing. Its portfolio consists of diverse industries and its investment activities are carried across the United States.
Unpacking Gladstone Investment Corp's Dividend History
Gladstone Investment Corp has maintained a consistent dividend payment record since 2005, with dividends currently distributed on a monthly basis. Furthermore, the company has increased its dividend each year since 2010, earning it the status of a dividend achiever. This honor is given to companies that have increased their dividend each year for at least the past 13 years.
Exploring Gladstone Investment Corp's Dividend Yield and Growth
As of today, Gladstone Investment Corp currently has a 12-month trailing dividend yield of 7.31% and a 12-month forward dividend yield of 7.35%. This suggests an expectation of increased dividend payments over the next 12 months.
Over the past three years, Gladstone Investment Corp's annual dividend growth rate was 4.20%. Extended to a five-year horizon, this rate decreased to 3.40% per year. And over the past decade, Gladstone Investment Corp's annual dividends per share growth rate stands at 3.70%.
Based on Gladstone Investment Corp's dividend yield and five-year growth rate, the 5-year yield on cost of Gladstone Investment Corp stock as of today is approximately 8.64%.
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, Gladstone Investment Corp's dividend payout ratio is 0.97, which may suggest that the company's dividend may not be sustainable.
Gladstone Investment Corp's profitability rank, offers an understanding of the company's earnings prowess relative to its peers. GuruFocus ranks Gladstone Investment Corp's profitability 3 out of 10 as of 2023-06-30, suggesting the dividend may not be sustainable. The company has reported net profit in 8 years out of past 10 years.
Growth Metrics: The Future Outlook
To ensure the sustainability of dividends, a company must have robust growth metrics. Gladstone Investment Corp's growth rank of 3 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 Gladstone Investment Corp's revenue per share, combined with the 3-year revenue growth rate, indicates a strong revenue model. Gladstone Investment Corp's revenue has increased by approximately 59.00% per year on average, a rate that outperforms than approximately 88.86% of global competitors.
Concluding Thoughts
While Gladstone Investment Corp has a commendable history of consistent and growing dividends, the company's high payout ratio and low profitability rank raise concerns about the sustainability of these dividends. Additionally, the company's growth metrics do not paint a promising picture for future dividend growth. However, the company's impressive revenue growth rate provides some optimism. Investors should weigh these factors carefully before making investment decisions.
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This article first appeared on GuruFocus.
