Gladstone Capital Corp's Dividend Analysis
An in-depth look at GLAD's dividend performance and sustainability
Gladstone Capital Corp (NASDAQ:GLAD) recently announced a dividend of $0.08 per share, payable on 2023-11-30, with the ex-dividend date set for 2023-11-17. As investors anticipate this forthcoming payment, it's crucial to delve into the company's dividend history, yield, and growth rates. Leveraging data from GuruFocus, we'll analyze Gladstone Capital Corp's dividend performance and assess its sustainability.
Understanding Gladstone Capital Corp's Business
This Powerful Chart Made Peter Lynch 29% A Year For 13 Years
How to calculate the intrinsic value of a stock?
Gladstone Capital Corp is an externally managed, closed-end, non-diversified management investment company. The firm aims to generate and grow current income by investing in debt securities of established businesses that provide stable earnings and cash flow. This income is used to cover expenses, make principal and interest payments on its outstanding indebtedness, and distribute dividends to stockholders. The company also seeks to provide its stockholders with long-term capital appreciation by investing in equity securities of businesses that can grow over time.
Reviewing Gladstone Capital Corp's Dividend History
Since 2001, Gladstone Capital Corp has upheld a consistent dividend payment record, with dividends currently distributed on a monthly basis. The chart below illustrates the annual Dividends Per Share for historical trend analysis.
Gladstone Capital Corp's Dividend Yield and Growth
At present, Gladstone Capital Corp has a 12-month trailing dividend yield of 9.37% and a 12-month forward dividend yield of 10.01%, suggesting an anticipation of increased dividend payments over the next 12 months.
In the past three years, Gladstone Capital Corp's annual dividend growth rate was -1.80%. Over a five-year horizon, this rate increased to -1.50% per year. And over the past decade, the company's annual dividends per share growth rate was -0.60%. Based on the dividend yield and five-year growth rate, the 5-year yield on cost of Gladstone Capital Corp stock is approximately 8.69% today.
Evaluating Dividend Sustainability: Payout Ratio and Profitability
Assessing the sustainability of the dividend requires an evaluation of the company's payout ratio. The dividend payout ratio reveals the portion of earnings the company distributes as dividends. A lower ratio suggests that the company retains a significant part of its earnings, ensuring funds for future growth and unforeseen downturns. As of 2023-06-30, Gladstone Capital Corp's dividend payout ratio is 0.91, which may suggest potential challenges in sustaining the dividend.
Using Gladstone Capital Corp's profitability rank, we can gauge the company's earnings prowess relative to its peers. GuruFocus ranks Gladstone Capital Corp's profitability 4 out of 10 as of 2023-06-30, implying potential issues with dividend sustainability. The company has reported net profit in 9 out of the past 10 years.
Growth Metrics: The Future Outlook
For dividends to be sustainable, a company must demonstrate robust growth metrics. Gladstone Capital Corp's growth rank of 4 out of 10 suggests that the company may struggle with growth, potentially impacting dividend sustainability.
Revenue is vital to any company, and Gladstone Capital Corp's revenue per share, combined with the 3-year revenue growth rate, indicates a strong revenue model. However, with an average annual increase of approximately -6.20%, Gladstone Capital Corp's revenue underperforms approximately 66.78% 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. However, with an average annual increase of approximately -5.20%, Gladstone Capital Corp's earnings underperform approximately 62.13% of global competitors.
Concluding Remarks
While Gladstone Capital Corp's consistent dividend payment record is commendable, the company's negative growth rates, high payout ratio, and low profitability and growth ranks raise concerns about the sustainability of its dividends. Therefore, investors should carefully consider these factors before making investment decisions. Remember, a sustainable dividend is just as important as a high yield.
GuruFocus Premium users can screen for high-dividend yield stocks using the High Dividend Yield Screener.
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.
