Main Street Capital Corp's Dividend Analysis
An In-Depth Look at MAIN's Dividend Sustainability and Growth
Main Street Capital Corp (NYSE:MAIN) recently announced a dividend of $0.24 per share, payable on 2024-04-15, with the ex-dividend date set for 2024-04-05. 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 Main Street Capital Corp's dividend performance and assess its sustainability.
What Does Main Street Capital Corp Do?
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Main Street Capital Corp is an investment firm engaged in providing customized debt and equity financing to lower middle market companies and debt capital to middle market companies. The investment portfolio of the company is typically made to support management buyouts, recapitalizations, growth financings, refinancings, and acquisitions of companies that operate in diverse industry sectors. The group invests in secured debt investments, equity investments, warrants, and other securities of the lower middle market and middle market companies based in the United States. Business functioned through the U.S. region and it derives the majority of its income from the source of fees, commission, and interest.
A Glimpse at Main Street Capital Corp's Dividend History
Main Street Capital Corp has maintained a consistent dividend payment record since 2007. Dividends are currently distributed on a monthly basis.
Main Street Capital Corp has increased its dividend each year since 2014. The stock is thus listed as a dividend achiever, an honor that is given to companies that have increased their dividend each year for at least the past 10 years. Below is a chart showing annual Dividends Per Share for tracking historical trends.
Breaking Down Main Street Capital Corp's Dividend Yield and Growth
As of today, Main Street Capital Corp currently has a 12-month trailing dividend yield of 6.04% and a 12-month forward dividend yield of 6.23%. This suggests an expectation of increased dividend payments over the next 12 months.
Over the past three years, Main Street Capital Corp's annual dividend growth rate was 8.90%. Extended to a five-year horizon, this rate decreased to 5.40% per year. And over the past decade, Main Street Capital Corp's annual dividends per share growth rate stands at 3.80%.
Based on Main Street Capital Corp's dividend yield and five-year growth rate, the 5-year yield on cost of Main Street Capital Corp stock as of today is approximately 7.86%.
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 2023-12-31, Main Street Capital Corp's dividend payout ratio is 0.61.
Main Street Capital Corp's profitability rank, offers an understanding of the company's earnings prowess relative to its peers. GuruFocus ranks Main Street Capital Corp's profitability 6 out of 10 as of 2023-12-31, suggesting fair profitability. The company has reported positive net income for each year over the past decade, further solidifying its high profitability.
Growth Metrics: The Future Outlook
To ensure the sustainability of dividends, a company must have robust growth metrics. Main Street Capital Corp's growth rank of 6 out of 10 suggests that the company has a fair growth outlook.
Revenue is the lifeblood of any company, and Main Street Capital Corp's revenue per share, combined with the 3-year revenue growth rate, indicates a strong revenue model. Main Street Capital Corp's revenue has increased by approximately 100.20% per year on average, a rate that outperforms approximately 94.21% 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, Main Street Capital Corp's earnings increased by approximately 126.50% per year on average, a rate that outperforms approximately 95.63% of global competitors.
Lastly, the company's 5-year EBITDA growth rate of 21.60%, which outperforms approximately 76.99% of global competitors.
Next Steps
In conclusion, Main Street Capital Corp's commitment to consistent and growing dividend payments is evident from its status as a dividend achiever. The company's dividend growth rate, coupled with a reasonable payout ratio and solid profitability, suggests that its dividends are sustainable in the foreseeable future. Additionally, Main Street Capital Corp's robust growth metrics indicate a strong future outlook, further reinforcing the potential for continued dividend growth. Investors seeking dividend income with growth potential may find Main Street Capital Corp to be an attractive option. As always, it is recommended to conduct thorough research and consider individual investment goals before making any financial 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.
