Eagle Point Credit Co Inc's Dividend Analysis
Assessing the Sustainability of ECC's Upcoming Dividend
Eagle Point Credit Co Inc (NYSE:ECC) recently announced a dividend of $0.02 per share, payable on 2024-02-29, with the ex-dividend date set for 2024-02-08. 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 Eagle Point Credit Co Inc's dividend performance and assess its sustainability.
What Does Eagle Point Credit Co Inc Do?
This Powerful Chart Made Peter Lynch 29% A Year For 13 Years
How to calculate the intrinsic value of a stock?
Eagle Point Credit Co Inc is an externally managed, non-diversified closed-end management investment company.
A Glimpse at Eagle Point Credit Co Inc's Dividend History
Eagle Point Credit Co Inc has maintained a consistent dividend payment record since 2018. Dividends are currently distributed on a monthly basis. Below is a chart showing annual Dividends Per Share for tracking historical trends.
Breaking Down Eagle Point Credit Co Inc's Dividend Yield and Growth
As of today, Eagle Point Credit Co Inc currently has a 12-month trailing dividend yield of 16.88% and a 12-month forward dividend yield of 16.88%. This suggests an expectation of same dividend payments over the next 12 months.
Over the past three years, Eagle Point Credit Co Inc's annual dividend growth rate was -11.90%. Extended to a five-year horizon, this rate increased to 24.60% per year. Based on Eagle Point Credit Co Inc's dividend yield and five-year growth rate, the 5-year yield on cost of Eagle Point Credit Co Inc stock as of today is approximately 50.69%.
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, Eagle Point Credit Co Inc's dividend payout ratio is 1.54, which may suggest that the company's dividend may not be sustainable.
Eagle Point Credit Co Inc's profitability rank, offers an understanding of the company's earnings prowess relative to its peers. GuruFocus ranks Eagle Point Credit Co Inc'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 3 years out of past 10 years.
Growth Metrics: The Future Outlook
To ensure the sustainability of dividends, a company must have robust growth metrics. Eagle Point Credit Co Inc'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 Eagle Point Credit Co Inc's revenue per share, combined with the 3-year revenue growth rate, indicates a strong revenue model. Eagle Point Credit Co Inc's revenue has decreased by approximately -119.10% per year on average, a rate that underperforms approximately 99.01% 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, Eagle Point Credit Co Inc's earnings decreased by approximately -319.20% per year on average, a rate that underperforms approximately 99.76% of global competitors.
Next Steps in Dividend Investing
In conclusion, while Eagle Point Credit Co Inc's high dividend yield may be attractive, the company's negative growth rates, low profitability, and sustainability concerns raised by the payout ratio and growth metrics suggest that investors should proceed with caution. It is essential to consider whether the current dividend policy is maintainable in the long term, given the financial health and growth prospects of the company. Value investors may want to delve deeper into the company's financials and future outlook before making a decision. GuruFocus Premium users can screen for high-dividend yield stocks using the High Dividend Yield Screener to find potentially more sustainable dividend-paying investments.
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.
