PIMCO Dynamic Income Fund's Dividend Analysis
Assessing the Sustainability of PIMCO Dynamic Income Fund's Dividend
PIMCO Dynamic Income Fund (NYSE:PDI) recently announced a dividend of $0.22 per share, payable on 2024-02-01, with the ex-dividend date set for 2024-01-11. 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 PIMCO Dynamic Income Fund's dividend performance and assess its sustainability.
What Does PIMCO Dynamic Income Fund Do?
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PIMCO Dynamic Income Fund is a United States-based closed-end management investment company. The fund's investment objective is to seek current income. Its secondary objective is to seek capital appreciation. The fund invests worldwide in a portfolio of debt obligations and other income-producing securities with varying maturities and related derivative instruments. Its investments include mortgage-backed securities, investment grade, and high-yield corporates, corporate and sovereign bonds, other income-producing securities, and related derivative instruments.
A Glimpse at PIMCO Dynamic Income Fund's Dividend History
PIMCO Dynamic Income Fund has maintained a consistent dividend payment record since 2012. Dividends are currently distributed on a monthly basis. Below is a chart showing the annual Dividends Per Share for tracking historical trends.
Breaking Down PIMCO Dynamic Income Fund's Dividend Yield and Growth
As of today, PIMCO Dynamic Income Fund currently has a 12-month trailing dividend yield of 14.14% and a 12-month forward dividend yield of 14.14%. This suggests an expectation of the same dividend payments over the next 12 months. Based on PIMCO Dynamic Income Fund's dividend yield and five-year growth rate, the 5-year yield on cost of PIMCO Dynamic Income Fund stock as of today is approximately 14.14%.
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, PIMCO Dynamic Income Fund's dividend payout ratio is 3.95, which may suggest that the company's dividend may not be sustainable.
PIMCO Dynamic Income Fund's profitability rank, offers an understanding of the company's earnings prowess relative to its peers. GuruFocus ranks PIMCO Dynamic Income Fund's profitability 2 out of 10 as of 2023-06-30, suggesting the dividend may not be sustainable. The company has reported net profit in 4 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. PIMCO Dynamic Income Fund's growth rank of 2 out of 10 suggests that the company has poor growth prospects and thus, the dividend may not be sustainable.
Next Steps
In conclusion, while PIMCO Dynamic Income Fund's high dividend yield may be attractive, the sustainability of its dividend payments is questionable given its low profitability and growth metrics, as well as a high payout ratio. Investors should carefully consider these factors alongside the fund's overall performance and market conditions. For those seeking income-generating investments, it's crucial to evaluate the long-term viability of dividend payments. 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.
