Oxford Lane Capital Corp's Dividend Analysis
An in-depth look into the dividend history and growth of Oxford Lane Capital Corp
Oxford Lane Capital Corp(NASDAQ:OXLC) recently announced a dividend of $0.08 per share, payable on 2023-11-30, with the ex-dividend date set for 2023-11-15. 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 look into Oxford Lane Capital Corp's dividend performance and assess its sustainability.
What Does Oxford Lane Capital Corp Do?
This Powerful Chart Made Peter Lynch 29% A Year For 13 Years
How to calculate the intrinsic value of a stock?
Oxford Lane Capital Corp is a non-diversified closed-end management investment company. The fund's investment objective is to maximize its portfolio's risk-adjusted total return over its investment horizon. Its current focus is to seek that return by investing in equity and junior tranches of CLO(collateralized loan obligation) vehicles, which are collateralized primarily by a diverse portfolio of senior loans, and which generally have little to no exposure to real estate loans, mortgage loans or pools of consumer-based debt, such as credit card receivables or auto loans. Its investment strategy also includes investing in warehouse facilities, which are financing structures intended to aggregate senior loans that may be used to form the basis of a CLO vehicle.
A Glimpse at Oxford Lane Capital Corp's Dividend History
Oxford Lane Capital Corp has maintained a consistent dividend payment record since 2014. Dividends are currently distributed on a monthly basis. Below is a chart showing annual Dividends Per Share for tracking historical trends.
Breaking Down Oxford Lane Capital Corp's Dividend Yield and Growth
As of today, Oxford Lane Capital Corp currently has a 12-month trailing dividend yield of 18.15% and a 12-month forward dividend yield of 18.45%. This suggests an expectation of increased dividend payments over the next 12 months.
Over the past three years, Oxford Lane Capital Corp's annual dividend growth rate was -17.80%. Extended to a five-year horizon, this rate increased to -15.30% per year. Based on Oxford Lane Capital Corp's dividend yield and five-year growth rate, the 5-year yield on cost of Oxford Lane Capital Corp stock as of today is approximately 7.91%.
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 2023-03-31, Oxford Lane Capital Corp's dividend payout ratio is 0.00.
Oxford Lane Capital Corp's profitability rank, offers an understanding of the company's earnings prowess relative to its peers. GuruFocus ranks Oxford Lane Capital Corp's profitability 3 out of 10 as of 2023-03-31, 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. Oxford Lane Capital Corp'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 Oxford Lane Capital Corp's revenue per share, combined with the 3-year revenue growth rate, indicates a strong revenue model. Oxford Lane Capital Corp's revenue has increased by approximately 36.40% per year on average, a rate that outperforms approximately 82.87% 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, Oxford Lane Capital Corp's earnings increased by approximately 34.90% per year on average, a rate that outperforms approximately 78.21% of global competitors.
Conclusion
Considering Oxford Lane Capital Corp's dividend payments, dividend growth rate, payout ratio, profitability, and growth metrics, it appears that the company's dividends may face sustainability issues in the future. While the company has a strong track record of consistent dividend payments, the negative growth rate and low profitability rank raise concerns. Additionally, the company's poor growth rank and zero payout ratio indicate potential challenges in maintaining its dividend payments. Therefore, investors should closely monitor these factors when considering Oxford Lane Capital Corp's dividend performance.
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.
