Source Capital Inc's Dividend Analysis
Insights into the Dividend Performance and Sustainability of Source Capital Inc (NYSE:SOR)
Source Capital Inc (NYSE:SOR) recently announced a dividend of $0.21 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 delve into Source Capital Inc's dividend performance and assess its sustainability.
What Does Source Capital Inc Do?
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Source Capital Inc is a diversified, closed-end management investment company. The investment objective of the company is to seek maximum total return for Common shareholders from both capital appreciation and investment income to the extent consistent with the protection of invested capital. Its investment portfolio includes a wide range of securities with a primary emphasis on common stock.
A Glimpse at Source Capital Inc's Dividend History
Source Capital Inc has maintained a consistent dividend payment record since 1985. Dividends are currently distributed on a monthly basis. Below is a chart showing annual Dividends Per Share for tracking historical trends.
Breaking Down Source Capital Inc's Dividend Yield and Growth
As of today, Source Capital Inc currently has a 12-month trailing dividend yield of 6.00% and a 12-month forward dividend yield of 6.49%. This suggests an expectation of increased dividend payments over the next 12 months.
Over the past three years, Source Capital Inc's annual dividend growth rate was 30.50%. Extended to a five-year horizon, this rate decreased to 15.50% per year. Based on Source Capital Inc's dividend yield and five-year growth rate, the 5-year yield on cost of Source Capital Inc stock as of today is approximately 12.33%.
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, Source Capital Inc's dividend payout ratio is 0.47.
Source Capital Inc's profitability rank, offers an understanding of the company's earnings prowess relative to its peers. GuruFocus ranks Source Capital 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 past 10 years.
Growth Metrics: The Future Outlook
To ensure the sustainability of dividends, a company must have robust growth metrics. Source Capital 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
Considering Source Capital Inc's dividend payments, dividend growth rate, payout ratio, profitability, and growth metrics, it's crucial for investors to evaluate the sustainability of dividends. While the company has a history of consistent dividends, its current growth and profitability rankings indicate potential challenges in maintaining this trajectory. Investors should further investigate 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.
