PGIM High Yield Fund Inc's Dividend Analysis
Assessing the Sustainability of PGIM High Yield Fund Inc's Upcoming Dividend
PGIM High Yield Fund Inc (NYSE:ISD) recently announced a dividend of $0.11 per share, payable on 2024-01-05, with the ex-dividend date set for 2023-12-26. 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 PGIM High Yield Fund Inc's dividend performance and assess its sustainability.
What Does PGIM High Yield Fund Inc Do?
PGIM High Yield Fund Inc is a diversified, closed-end management investment company, active in the financial services domain. The Fund's investment objective is to provide a high level of current income. It invests at least 80% of its investable assets in a diversified portfolio of high-yield fixed-income instruments that are rated below investment grade with varying maturities and other investments.
A Glimpse at PGIM High Yield Fund Inc's Dividend History
PGIM High Yield Fund Inc has maintained a consistent dividend payment record since 2012. Dividends are currently distributed on a monthly basis. Below is a chart showing annual Dividends Per Share for tracking historical trends.
Breaking Down PGIM High Yield Fund Inc's Dividend Yield and Growth
As of today, PGIM High Yield Fund Inc currently has a 12-month trailing dividend yield of 10.06% and a 12-month forward dividend yield of 10.06%. This suggests an expectation of the same dividend payments over the next 12 months.
Over the past three years, PGIM High Yield Fund Inc's annual dividend growth rate was 3.00%. Extended to a five-year horizon, this rate increased to 4.80% per year. Based on PGIM High Yield Fund Inc's dividend yield and five-year growth rate, the 5-year yield on cost of PGIM High Yield Fund Inc stock as of today is approximately 12.72%.
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 2023-07-31, PGIM High Yield Fund Inc's dividend payout ratio is 2.24, which may suggest that the company's dividend may not be sustainable.
PGIM High Yield Fund Inc's profitability rank, offers an understanding of the company's earnings prowess relative to its peers. GuruFocus ranks PGIM High Yield Fund Inc's profitability 3 out of 10 as of 2023-07-31, suggesting the dividend may not be sustainable. The company has reported net profit in 5 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. PGIM High Yield Fund Inc'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 PGIM High Yield Fund Inc's revenue per share, combined with the 3-year revenue growth rate, indicates a strong revenue model. PGIM High Yield Fund Inc's revenue has increased by approximately 77.00% per year on average, a rate that outperforms approximately 91.81% 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, PGIM High Yield Fund Inc's earnings increased by approximately 82.70% per year on average, a rate that outperforms approximately 93.05% of global competitors.
Next Steps
In conclusion, while PGIM High Yield Fund Inc's high dividend yield and history of consistent payments are attractive, the sustainability of its dividends is a complex matter. The company's low profitability rank and growth rank hint at potential challenges ahead. However, strong revenue and earnings growth rates provide a counterbalance, suggesting some resilience in PGIM High Yield Fund Inc's financial performance. Investors should weigh these factors carefully, considering the company's future prospects and the broader economic environment. For those seeking to expand their portfolio with high-dividend yield stocks, GuruFocus Premium users can utilize the High Dividend Yield Screener for informed investment decisions.
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.
