Dividend and Income Fund (DNIF): A Deep Dive into Its Dividend Performance
An in-depth analysis of DNIF's dividend history, yield, and growth rates
Dividend and Income Fund (DNIF) recently announced a dividend of $0.25 per share, payable on 2023-09-28, with the ex-dividend date set for 2023-09-15. 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 Dividend and Income Funds dividend performance and assess its sustainability.
What Does Dividend and Income Fund Do?
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Dividend and Income Fund is a closed-ended management investment company. The fund's investment objective is to seek high current income with a secondary objective of capital appreciation. The fund seeks to invest in stocks of companies operating across diversified sectors. It mainly invests in dividend-paying stocks of companies across all capitalizations. The Fund seeks to achieve its objectives by investing, under normal circumstances, in income-generating equity securities, including dividend-paying common stocks, convertible securities, preferred stocks, securities of registered investment companies, exchange-traded funds organized as investment companies or otherwise, real estate investment trusts, depositary receipts, and other equity-related securities.
A Glimpse at Dividend and Income Fund's Dividend History
Dividend and Income Fund has maintained a consistent dividend payment record since 1998. Dividends are currently distributed on a quarterly basis. Below is a chart showing annual Dividends Per Share for tracking historical trends.
Breaking Down Dividend and Income Fund's Dividend Yield and Growth
As of today, Dividend and Income Fund currently has a 12-month trailing dividend yield of 8.88% and a 12-month forward dividend yield of 8.88%. This suggests an expectation of same dividend payments over the next 12 months.
Over the past three years, Dividend and Income Fund's annual dividend growth rate was 7.70%. Extended to a five-year horizon, this rate increased to 14.30% per year. Based on Dividend and Income Fund's dividend yield and five-year growth rate, the 5-year yield on cost of Dividend and Income Fund stock as of today is approximately 17.32%.
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 2023-06-30, Dividend and Income Fund's dividend payout ratio is 0.48.
Dividend and Income Fund's profitability rank, offers an understanding of the company's earnings prowess relative to its peers. GuruFocus ranks Dividend and Income Fund'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 5 years out of past 10 years.
Growth Metrics: The Future Outlook
To ensure the sustainability of dividends, a company must have robust growth metrics. Dividend and Income Fund's growth rank of 3 out of 10 suggests that the company has poor growth prospects and thus, the dividend may not be sustainable.
Next Steps
Despite the impressive yield and consistent dividend payment history, the sustainability of dividends from Dividend and Income Fund remains questionable due to its low profitability and growth ranks. Investors should further investigate the company's financials and future growth prospects before making an investment decision. GuruFocus Premium users can screen for high-dividend yield stocks using the High Dividend Yield Screener.
This article first appeared on GuruFocus.
