Unlocking the Dividend Potential of WhiteHorse Finance Inc (WHF)
A Comprehensive Analysis of the Company's Dividend Performance and Sustainability
WhiteHorse Finance Inc(NASDAQ:WHF) recently announced a dividend of $0.37 per share, payable on 2023-10-03, with the ex-dividend date set for 2023-09-18. 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 deep dive into WhiteHorse Finance Inc's dividend performance and assess its sustainability.
About WhiteHorse Finance Inc
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WhiteHorse Finance Inc is a non-diversified, closed-end management investment company. It makes debt investments in privately held; small-cap companies located in the United States. Its investment objective is to generate attractive risk-adjusted returns for investors, primarily by originating senior secured loans to privately held small-cap companies across a broad range of industries.
WhiteHorse Finance Inc's Dividend History
WhiteHorse Finance Inc has maintained a consistent dividend payment record since 2012. Dividends are currently distributed on a quarterly basis. WhiteHorse Finance Inc has increased its dividend each year since 2012. The stock is thus listed as a dividend achiever, an honor that is given to companies that have increased their dividend each year for at least the past 11 years.
WhiteHorse Finance Inc's Dividend Yield and Growth
As of today, WhiteHorse Finance Inc currently has a 12-month trailing dividend yield of 10.68% and a 12-month forward dividend yield of 11.01%. This suggests an expectation of increased dividend payments over the next 12 months. And over the past decade, WhiteHorse Finance Inc's annual dividends per share growth rate stands at an impressive 12.40%.
Based on WhiteHorse Finance Inc's dividend yield and five-year growth rate, the 5-year yield on cost of WhiteHorse Finance Inc stock as of today is approximately 10.68%.
Assessing Dividend Sustainability: 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, WhiteHorse Finance Inc's dividend payout ratio is 2.35. This may suggest that the company's dividend may not be sustainable.
WhiteHorse Finance Inc's profitability rank, offers an understanding of the company's earnings prowess relative to its peers. GuruFocus ranks WhiteHorse Finance Inc's profitability 4 out of 10 as of 2023-06-30, suggesting the dividend may not be sustainable. The company has reported net profit in 9 years out of the past 10 years.
WhiteHorse Finance Inc's Growth Metrics
To ensure the sustainability of dividends, a company must have robust growth metrics. WhiteHorse Finance Inc's growth rank of 4 out of 10 suggests that the company has poor growth prospects and thus, the dividend may not be sustainable. WhiteHorse Finance Inc's revenue has increased by approximately -18.00% per year on average, a rate that underperforms than approximately 75.59% 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, WhiteHorse Finance Inc's earnings increased by approximately -23.20% per year on average, a rate that underperforms than approximately 77.99% of global competitors. Lastly, the company's 5-year EBITDA growth rate of -17.60%, which underperforms than approximately 91.19% of global competitors.
Conclusion
While WhiteHorse Finance Inc has a commendable track record in terms of consistent and increasing dividend payments, the sustainability of these dividends is questionable. The company's high payout ratio, low profitability rank, and poor growth metrics raise concerns about the future of its dividends. Therefore, investors should take these factors into consideration when making investment decisions. GuruFocus Premium users can screen for high-dividend yield stocks using the High Dividend Yield Screener.
This article first appeared on GuruFocus.
