PennyMac Mortgage Investment Trust's Dividend Analysis
Understanding PMT's Dividend Performance and Sustainability
PennyMac Mortgage Investment Trust (NYSE:PMT) recently announced a dividend of $0.4 per share, payable on 2023-10-27, with the ex-dividend date set for 2023-10-12. 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 delve into PennyMac Mortgage Investment Trust's dividend performance and assess its sustainability.
What Does PennyMac Mortgage Investment Trust Do?
Warning! GuruFocus has detected 4 Warning Signs with PMT. Click here to check it out.
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PennyMac Mortgage Investment Trust is a specialty finance company that primarily invests in residential mortgage loans and mortgage-related assets. The company's operations include activities such as production and servicing of financial securities based on residential loans and pooling and reselling of high-credit-quality mortgages. The company operates through four segments: correspondent production, credit-sensitive strategies, interest-rate-sensitive strategies, and corporate activities. The correspondent production segment, which generates income via purchasing, pooling, and reselling of loans or mortgage-backed securities, accounts for roughly half of the company's income.
A Glimpse at PennyMac Mortgage Investment Trust's Dividend History
PennyMac Mortgage Investment Trust has maintained a consistent dividend payment record since 2010. Dividends are currently distributed on a quarterly basis. Below is a chart showing annual Dividends Per Share for tracking historical trends.
Breaking Down PennyMac Mortgage Investment Trust's Dividend Yield and Growth
As of today, PennyMac Mortgage Investment Trust currently has a 12-month trailing dividend yield of 13.70% and a 12-month forward dividend yield of 13.12%. This suggests an expectation of decreased dividend payments over the next 12 months.
Extended to a five-year horizon, this rate increased to 3.60% per year. Over the past decade, PennyMac Mortgage Investment Trust's annual dividends per share growth rate stands at -3.20%. Based on PennyMac Mortgage Investment Trust's dividend yield and five-year growth rate, the 5-year yield on cost of PennyMac Mortgage Investment Trust stock as of today is approximately 16.35%.
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 2023-06-30, PennyMac Mortgage Investment Trust's dividend payout ratio is 2.85, suggesting that the company's dividend may not be sustainable.
PennyMac Mortgage Investment Trust's profitability rank, offers an understanding of the company's earnings prowess relative to its peers. GuruFocus ranks PennyMac Mortgage Investment Trust's profitability 4 out of 10 as of 2023-06-30, suggesting the dividend may not be sustainable. The company has reported net profit in 9 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. PennyMac Mortgage Investment Trust's growth rank of 4 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 PennyMac Mortgage Investment Trust's revenue per share, combined with the 3-year revenue growth rate, indicates a strong revenue model. PennyMac Mortgage Investment Trust's revenue has increased by approximately -23.50% per year on average, a rate that underperforms approximately 94.63% of global competitors.
Next Steps
In conclusion, while PennyMac Mortgage Investment Trust's dividend yield is attractive, the sustainability of its dividend payments is questionable due to its high payout ratio and low profitability rank. Furthermore, the company's poor growth prospects and underperforming revenue growth rate further cast doubts on the sustainability of its dividends. Investors should consider these factors 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.
