Invesco Senior Income Trust's Dividend Analysis
A Comprehensive Review of Invesco Senior Income Trust's Dividend Performance and Sustainability
Invesco Senior Income Trust (NYSE:VVR) recently announced a dividend of $0.04 per share, payable on October 31, 2023, with the ex-dividend date set for October 13, 2023. As investors anticipate this upcoming payment, it's crucial to also examine the company's dividend history, yield, and growth rates. Using the data from GuruFocus, we delve into Invesco Senior Income Trust's dividend performance and evaluate its sustainability.
What Does Invesco Senior Income Trust Do?
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Invesco Senior Income Trust is a diversified, closed-end management investment company. The firm aims to provide a high level of current income, consistent with the preservation of capital. It primarily invests in a portfolio of interests in floating or variable senior loans to corporations, partnerships, and other entities across various industries and geographic regions.
A Glimpse at Invesco Senior Income Trust's Dividend History
Invesco Senior Income Trust has maintained a consistent dividend payment record since 1998, with dividends currently distributed on a monthly basis. The chart below shows the annual Dividends Per Share for tracking historical trends.
Breaking Down Invesco Senior Income Trust's Dividend Yield and Growth
As of today, Invesco Senior Income Trust has a 12-month trailing dividend yield of 10.84% and a 12-month forward dividend yield of 12.73%. This suggests an expectation of increased dividend payments over the next 12 months.
Invesco Senior Income Trust's dividend yield of 10.84% is near a 10-year high and outperforms 82.39% of global competitors in the Asset Management industry. This suggests that the company's dividend yield is an attractive proposition for income investors.
Over the past three years, Invesco Senior Income Trust's annual dividend growth rate was 9.50%. Extended to a five-year horizon, this rate decreased to 4.80% per year.
Based on Invesco Senior Income Trust's dividend yield and five-year growth rate, the 5-year yield on cost of Invesco Senior Income Trust stock as of today is approximately 13.70%.
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, ensuring the availability of funds for future growth and unexpected downturns. As of February 28, 2023, Invesco Senior Income Trust's dividend payout ratio is 36.20, which may suggest that the company's dividend may not be sustainable.
Invesco Senior Income Trust's profitability rank, as of February 28, 2023, is 3 out of 10. This suggests the dividend may not be sustainable, considering the company has reported net profit in 6 years out of the past 10 years.
Growth Metrics: The Future Outlook
Invesco Senior 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.
Revenue is the lifeblood of any company, and Invesco Senior Income Trust's revenue per share, combined with the 3-year revenue growth rate, indicates a strong revenue model. However, the company's revenue has increased by approximately -41.70% per year on average, a rate that underperforms approximately 89.42% 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, Invesco Senior Income Trust's earnings increased by approximately -51.90% per year on average, a rate that underperforms approximately 89.33% of global competitors.
Lastly, the company's 5-year EBITDA growth rate of -29.60% underperforms approximately 96.96% of global competitors.
Next Steps
In conclusion, while Invesco Senior Income Trust's dividend yield and consistent payment record are appealing, its payout ratio, profitability rank, and growth metrics raise concerns about the sustainability of its dividends. Investors should consider these factors carefully before making investment decisions. 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.
