Tekla World Healthcare Fund's Dividend Analysis
An In-depth Look into Tekla World Healthcare Fund's Dividend Performance and Sustainability
Tekla World Healthcare Fund (NYSE:THW) recently announced a dividend of $0.12 per share, payable on 2023-10-31, with the ex-dividend date set for 2023-10-19. As investors anticipate this upcoming payment, it's essential to delve into the company's dividend history, yield, and growth rates. Using data from GuruFocus, we will examine Tekla World Healthcare Fund's dividend performance and assess its sustainability.
What Does Tekla World Healthcare Fund Do?
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Tekla World Healthcare Fund is a non-diversified closed-end management investment company. Its investment objective is to seek current income and long-term capital appreciation through investments in U.S. and non-U.S. companies engaged in the healthcare industry. The company's investment portfolio comprises investments in different sub-sectors such as pharmaceuticals and biotechnology, healthcare providers and services, real estate investment trusts, medical devices and diagnostics, and other areas.
A Glimpse at Tekla World Healthcare Fund's Dividend History
Tekla World Healthcare Fund has maintained a consistent dividend payment record since 2015. Dividends are currently distributed on a monthly basis. Below is a chart showing annual Dividends Per Share for tracking historical trends.
Breaking Down Tekla World Healthcare Fund's Dividend Yield and Growth
As of today, Tekla World Healthcare Fund currently has a 12-month trailing dividend yield of 12.00% and a 12-month forward dividend yield of 12.00%. This suggests an expectation of same dividend payments over the next 12 months.
Based on Tekla World Healthcare Fund's dividend yield and five-year growth rate, the 5-year yield on cost of Tekla World Healthcare Fund stock as of today is approximately 12.00%.
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 2023-03-31, Tekla World Healthcare Fund's dividend payout ratio is 0.00.
Tekla World Healthcare Fund's profitability rank, offers an understanding of the company's earnings prowess relative to its peers. GuruFocus ranks Tekla World Healthcare Fund's profitability 2 out of 10 as of 2023-03-31, 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. Tekla World Healthcare 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.
Revenue is the lifeblood of any company, and Tekla World Healthcare Fund's revenue per share, combined with the 3-year revenue growth rate, indicates a strong revenue model. Tekla World Healthcare Fund's revenue has increased by approximately -75.90% per year on average, a rate that underperforms than approximately 96.07% 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, Tekla World Healthcare Fund's earnings increased by approximately -136.00% per year on average, a rate that underperforms than approximately 96.75% of global competitors.
Next Steps
Considering Tekla World Healthcare Fund's dividend payments, dividend growth rate, payout ratio, profitability, and growth metrics, it's clear that the company's dividend performance presents a mixed picture. While the fund's consistent dividend payments are commendable, its low profitability and growth ranks suggest that its dividends may not be sustainable in the long run. Therefore, investors should exercise caution and conduct thorough research 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.
