Delving into Western Asset Mortgage Capital Corp's Dividend Performance
A Comprehensive Analysis of the Company's Dividend History, Yield, and Growth Rates
Western Asset Mortgage Capital Corp (NYSE:WMC) recently announced a dividend of $0.35 per share, payable on 2023-10-26, with the ex-dividend date set for 2023-09-29. 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 Western Asset Mortgage Capital Corp's dividend performance and assess its sustainability.
Understanding Western Asset Mortgage Capital Corp's Operations
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Western Asset Mortgage Capital Corp is a specialty financial REIT company managing a diversified mortgage-market investment portfolio. The corporation is externally managed by Western Asset Management Company and emphasizes on undervalued assets. It focuses on investing in, financing and managing primarily residential mortgage-backed securities, with its core focus on Agency RMBS. The company aims to provide attractive risk-adjusted returns to its investors over the long-term across market conditions and economic cycles.
A Look at Western Asset Mortgage Capital Corp's Dividend History
Western Asset Mortgage Capital Corp has maintained a consistent dividend payment record since 2012. Dividends are currently distributed on a quarterly basis. Below is a chart showing annual Dividends Per Share for tracking historical trends.
Dissecting Western Asset Mortgage Capital Corp's Dividend Yield and Growth
As of today, Western Asset Mortgage Capital Corp currently has a 12-month trailing dividend yield of 15.37% and a 12-month forward dividend yield of 14.34%. This suggests an expectation of decreased dividend payments over the next 12 months.
Over the past three years, Western Asset Mortgage Capital Corp's annual dividend growth rate was -10.80%. Extended to a five-year horizon, this rate decreased to -22.80% per year.
Based on Western Asset Mortgage Capital Corp's dividend yield and five-year growth rate, the 5-year yield on cost of Western Asset Mortgage Capital Corp stock as of today is approximately 4.21%.
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, Western Asset Mortgage Capital Corp's dividend payout ratio is 0.00.
Western Asset Mortgage Capital Corp's profitability rank, offers an understanding of the company's earnings prowess relative to its peers. GuruFocus ranks Western Asset Mortgage Capital Corp'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 the past 10 years.
Growth Metrics: The Future Outlook
To ensure the sustainability of dividends, a company must have robust growth metrics. Western Asset Mortgage Capital Corp's growth rank of 2 out of 10 suggests that the company has poor growth prospects and thus, the dividend may not be sustainable.
Conclusion
Considering Western Asset Mortgage Capital Corp's dividend payments, dividend growth rate, payout ratio, profitability, and growth metrics, investors should exercise caution. The company's declining dividend growth rate, low profitability rank, and poor growth prospects suggest that the sustainability of its dividends may be in question. Investors should closely monitor these factors while making investment decisions.
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This article first appeared on GuruFocus.
