Franklin Limited Duration Income Trust's Dividend Analysis: A Deep Dive into its Performance ...
A Comprehensive Examination of the Dividend Performance of Franklin Limited Duration Income Trust
Franklin Limited Duration Income Trust (FTF) recently announced a dividend of $0.06 per share, payable on 2023-09-29, 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 Franklin Limited Duration Income Trust's dividend performance and assess its sustainability.
Franklin Limited Duration Income Trust: A Brief Introduction
Warning! GuruFocus has detected 4 Warning Sign with FTF. Click here to check it out.
This Powerful Chart Made Peter Lynch 29% A Year For 13 Years
How to calculate the intrinsic value of a stock?
Franklin Limited Duration Income Trust is a closed-end investment company based in the United States. It conducts its investment with an aim to provide high, current income, with a secondary objective of capital appreciation. To align its investment objective with its strategy, the company invests in a diversified mix of fixed-income securities. Its portfolio is dominated by considerable investments in high-yield corporate bonds while touching upon other avenues such as senior secured floating rate corporate loans, mortgage-backed securities, commercial mortgage-backed securities, asset-backed securities, common stocks and other short-term investments.
Tracing Franklin Limited Duration Income Trust's Dividend History
Franklin Limited Duration Income Trust has maintained a consistent dividend payment record since 2003. Dividends are currently distributed on a monthly basis. Below is a chart showing annual Dividends Per Share for tracking historical trends.
Analyzing Franklin Limited Duration Income Trust's Dividend Yield and Growth
As of today, Franklin Limited Duration Income Trust currently has a 12-month trailing dividend yield of 11.57% and a 12-month forward dividend yield of 11.44%. This suggests an expectation of decreased dividend payments over the next 12 months.
Over the past three years, Franklin Limited Duration Income Trust's annual dividend growth rate was -7.50%. Extended to a five-year horizon, this rate decreased to -12.80% per year. And over the past decade, Franklin Limited Duration Income Trust's annual dividends per share growth rate stands at -0.20%.
Based on Franklin Limited Duration Income Trust's dividend yield and five-year growth rate, the 5-year yield on cost of Franklin Limited Duration Income Trust stock as of today is approximately 5.83%.
Is Franklin Limited Duration Income Trust's Dividend Sustainable?
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, Franklin Limited Duration Income Trust's dividend payout ratio is 1.42. And this may suggest that the company's dividend may not be sustainable.
Franklin Limited Duration Income Trust's profitability rank, offers an understanding of the company's earnings prowess relative to its peers. GuruFocus ranks Franklin Limited Duration Income Trust'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 7 years out of past 10 years.
What Does Franklin Limited Duration Income Trust's Growth Metrics Indicate?
To ensure the sustainability of dividends, a company must have robust growth metrics. Franklin Limited Duration Income Trust's growth rank of 3 out of 10 suggests that the company has poor growth prospects and thus, the dividend may not be sustainable.
Concluding Thoughts
While Franklin Limited Duration Income Trust's high dividend yield might attract investors, the negative dividend growth rate, high payout ratio, and low profitability and growth ranks suggest that its dividends might not be sustainable in the long run. It is crucial for investors to consider these factors 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.
