Dissecting Pioneer Floating Rate Trust's Dividend Performance and Sustainability
An in-depth analysis of the upcoming dividend, dividend history, yield, growth rates, and sustainability of Pioneer Floating Rate Trust (NYSE:PHD)
Pioneer Floating Rate Trust (NYSE:PHD) has recently announced a dividend of $0.09 per share, set to be paid out on 2023-09-29, with the ex-dividend date marked for 2023-09-19. As investors eagerly anticipate this forthcoming payment, it's crucial to delve into the company's dividend history, yield, and growth rates. This article, leveraging data from GuruFocus, provides an in-depth look into Pioneer Floating Rate Trust's dividend performance and examines its sustainability.
Understanding Pioneer Floating Rate Trust
This Powerful Chart Made Peter Lynch 29% A Year For 13 Years
How to calculate the intrinsic value of a stock?
Pioneer Floating Rate Trust operates as a diversified fund, primarily investing in floating-rate loans in pursuit of a high level of current income. The company's primary investment objective is to provide a high level of current income while seeking the preservation of capital.
Exploring Pioneer Floating Rate Trust's Dividend History
Since 2005, Pioneer Floating Rate Trust has maintained a consistent dividend payment record, with dividends currently being distributed on a monthly basis. The chart below provides a snapshot of the company's annual Dividends Per Share to help track historical trends.
Assessing Pioneer Floating Rate Trust's Dividend Yield and Growth
At present, Pioneer Floating Rate Trust boasts a 12-month trailing dividend yield of 11.22% and a 12-month forward dividend yield of 11.48%. This indicates an expectation of increased dividend payments over the next 12 months.
Pioneer Floating Rate Trust's dividend yield of 11.22% is nearing a 10-year high and outperforms 86.9% of global competitors in the Asset Management industry. This highlights the company's dividend yield as an attractive proposition for income investors.
Over the past three years, Pioneer Floating Rate Trust's annual dividend growth rate was -2.20%. When extended to a five-year horizon, this rate increased to -1.50% per year. Based on Pioneer Floating Rate Trust's dividend yield and five-year growth rate, the 5-year yield on cost of Pioneer Floating Rate Trust stock as of today is approximately 10.31%.
Is Pioneer Floating Rate Trust's Dividend Sustainable?
To gauge the sustainability of the dividend, it's essential to examine the company's payout ratio. The dividend payout ratio provides insights into the portion of earnings the company allocates to dividends. A lower ratio suggests that the company retains a significant part of its earnings, thus ensuring funds for future growth and unexpected downturns. As of 2023-05-31, Pioneer Floating Rate Trust's dividend payout ratio is 8.39, which may suggest that the company's dividend may not be sustainable.
Pioneer Floating Rate Trust's profitability rank offers an understanding of the company's earnings prowess relative to its peers. As of 2023-05-31, GuruFocus ranks Pioneer Floating Rate Trust's profitability 2 out of 10, suggesting the dividend may not be sustainable. The company has reported net profit in 5 years out of the past 10 years.
Looking at Growth Metrics
For dividends to be sustainable, a company must exhibit robust growth metrics. Pioneer Floating Rate Trust's growth rank of 2 out of 10 suggests that the company has poor growth prospects, thus implying that the dividend may not be sustainable.
Conclusion
While Pioneer Floating Rate Trust has consistently paid dividends and offers an attractive yield, the sustainability of these dividends is questionable due to the company's low payout ratio, profitability rank, and growth rank. Investors should consider these factors before making investment decisions. GuruFocus Premium users can screen for high-dividend yield stocks using the High Dividend Yield Screener.
This article first appeared on GuruFocus.
