Unraveling DWS Strategic Municipal Income Trust's Dividend Performance and Sustainability
Deep Dive into KSM's Dividend History, Yield, Growth Rate, and Future Prospects
DWS Strategic Municipal Income Trust (NYSE:KSM) recently announced a dividend of $0.03 per share, payable on 2023-09-29, with the ex-dividend date set for 2023-09-15. As investors anticipate this upcoming payment, it's crucial to examine the company's dividend history, yield, and growth rates. In this article, we will use GuruFocus data to delve into DWS Strategic Municipal Income Trust's dividend performance and assess its sustainability.
Overview of DWS Strategic Municipal Income Trust
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DWS Strategic Municipal Income Trust is a closed-end, diversified management investment company. The fund's investment objective is to provide a high level of current income exempt from federal income tax. The company achieves this objective by investing in a portfolio of tax-exempt municipal securities. Its product portfolio includes ETFs, Mutual Funds, Closed-End-Funds, Money Market Funds, among others.
DWS Strategic Municipal Income Trust's Dividend History
DWS Strategic Municipal Income Trust has upheld a consistent dividend payment record since 1989, with dividends currently distributed on a monthly basis. The chart below tracks the annual Dividends Per Share to reveal historical trends.
DWS Strategic Municipal Income Trust's Dividend Yield and Growth
As of today, DWS Strategic Municipal Income Trust showcases a 12-month trailing dividend yield of 4.68% and a 12-month forward dividend yield of 3.89%, indicating an expected decrease in dividend payments over the next 12 months.
Over the past three years, the company's annual dividend growth rate was -5.60%. When extended to a five-year horizon, this rate decreased to -5.80% per year. Considering the dividend yield and five-year growth rate, the 5-year yield on cost of DWS Strategic Municipal Income Trust stock is approximately 3.47% as of today.
The Sustainability of DWS Strategic Municipal Income Trust's Dividend
To evaluate the sustainability of the dividend, one must examine the company's payout ratio. The dividend payout ratio indicates 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 2023-05-31, DWS Strategic Municipal Income Trust's dividend payout ratio is 0.00.
DWS Strategic Municipal Income Trust's profitability rank is 2 out of 10 as of 2023-05-31, suggesting the dividend may not be sustainable. The company has reported net profit in 4 years out of the past 10 years.
Future Outlook: DWS Strategic Municipal Income Trust's Growth Metrics
A company must have robust growth metrics to ensure the sustainability of dividends. DWS Strategic Municipal Income Trust's growth rank of 2 out of 10 suggests that the company has poor growth prospects, and thus, the dividend may not be sustainable.
Conclusion
While DWS Strategic Municipal Income Trust has a consistent dividend payment record, its negative growth rate, low profitability rank, and poor growth prospects raise questions about the sustainability of its dividends. Investors should consider these factors carefully before 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.
