Royce Value Trust Inc's Dividend Analysis
Assessing the Sustainability of Royce Value Trust Inc's Upcoming Dividend
Royce Value Trust Inc (NYSE:RVT) recently announced a dividend of $0.29 per share, payable on 2023-12-22, with the ex-dividend date set for 2023-12-08. 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 Royce Value Trust Inc's dividend performance and assess its sustainability.
What Does Royce Value Trust Inc Do?
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Royce Value Trust Inc is a diversified closed-end investment company. It invests in diversified sectors including consumer discretionary, consumer staples, healthcare, financial, IT, telecommunications, and materials. The company portfolio includes common stocks, preferred stocks, corporate bonds, and repurchase agreements.
A Glimpse at Royce Value Trust Inc's Dividend History
Royce Value Trust Inc has maintained a consistent dividend payment record since 1987. Dividends are currently distributed on a quarterly basis.
Below is a chart showing annual Dividends Per Share for tracking historical trends.
Breaking Down Royce Value Trust Inc's Dividend Yield and Growth
As of today, Royce Value Trust Inc currently has a 12-month trailing dividend yield of 7.73% and a 12-month forward dividend yield of 7.73%. This suggests an expectation of same dividend payments over the next 12 months.
Over the past three years, Royce Value Trust Inc's annual dividend growth rate was 6.30%. Extended to a five-year horizon, this rate decreased to 4.30% per year. Based on Royce Value Trust Inc's dividend yield and five-year growth rate, the 5-year yield on cost of Royce Value Trust Inc stock as of today is approximately 9.54%.
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, Royce Value Trust Inc's dividend payout ratio is 0.90, which may suggest that the company's dividend may not be sustainable.
Royce Value Trust Inc's profitability rank, offers an understanding of the company's earnings prowess relative to its peers. GuruFocus ranks Royce Value Trust Inc'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. Royce Value Trust Inc'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 Royce Value Trust Inc offers an attractive dividend yield and a history of consistent dividend payments, the company's growth prospects and profitability raise concerns about the sustainability of its dividends. The relatively high payout ratio and low profitability and growth ranks could be indicators that the current dividend level might not be maintained in the long term. Investors should therefore closely monitor these metrics when considering Royce Value Trust Inc as a potential addition to their dividend-focused portfolios. For those seeking high-dividend yield opportunities, GuruFocus Premium users can explore further 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.
