Invesco Senior Income Trust's Dividend Analysis
Assessing the Sustainability of VVR's Dividend Payouts
Invesco Senior Income Trust (NYSE:VVR) recently announced a dividend of $0.04 per share, payable on 2024-01-31, with the ex-dividend date set for 2024-01-16. 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 Invesco Senior Income Trust's dividend performance and assess 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 investment objective of the company is to provide a high level of current income, consistent with the preservation of capital. The company invests primarily in a portfolio of interests in floating or variable senior loans to corporations, partnerships, and other entities which operate in a variety of 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. Dividends are currently distributed on a monthly basis. Below is a chart showing 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 currently has a 12-month trailing dividend yield of 11.59% and a 12-month forward dividend yield of 11.86%. This suggests an expectation of increased dividend payments over the next 12 months.
Invesco Senior Income Trust's dividend yield of 11.59% is near a 10-year high and outperforms 89.27% of global competitors in the Asset Management industry, suggesting that the company's dividend yield stands out as 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 14.65%.
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 2023-08-31, Invesco Senior Income Trust's dividend payout ratio is 1.10, which may suggest that the company's dividend may not be sustainable.
Invesco Senior Income Trust's profitability rank, offers an understanding of the company's earnings prowess relative to its peers. GuruFocus ranks Invesco Senior Income Trust's profitability 3 out of 10 as of 2023-08-31, suggesting the dividend may not be sustainable. The company has reported net profit in 6 years out of the past 10 years.
Growth Metrics: The Future Outlook
To ensure the sustainability of dividends, a company must have robust growth metrics. 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. Invesco Senior Income Trust's revenue has increased by approximately -41.70% per year on average, a rate that underperforms approximately 90.59% 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 90.25% of global competitors. Lastly, the company's 5-year EBITDA growth rate of -29.60%, which underperforms approximately 96.89% of global competitors.
Next Steps
The analysis of Invesco Senior Income Trust's dividend payments, dividend growth rate, payout ratio, profitability, and growth metrics presents a mixed picture for investors. While the high yield is attractive, the sustainability of such payouts is questionable given the company's low profitability and growth ranks. Moreover, the negative trends in revenue and earnings growth rates could signal challenges ahead. Investors should weigh the potential income benefits against the risk of dividend cuts in the future. Value investors, in particular, may seek to balance the lure of high yields with the fundamental strength and outlook of the company. 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.
