Unraveling Gladstone Capital Corp's Dividend Performance and Sustainability
A Comprehensive Analysis of Dividend History, Yield, Growth, and Payout Ratio
Gladstone Capital Corp (NASDAQ:GLAD) recently announced a dividend of $0.08 per share, payable on 2023-09-29, with the ex-dividend date set for 2023-09-20. As investors anticipate this forthcoming payment, it's crucial to examine the company's dividend history, yield, and growth rates. Leveraging data from GuruFocus, this article provides an in-depth analysis of Gladstone Capital Corp's dividend performance and evaluates its sustainability.
A Brief Overview of Gladstone Capital Corp
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Gladstone Capital Corp is an externally managed, closed-end, non-diversified management investment company. Its investment objectives are to generate and grow current income by investing in debt securities of established businesses that provide stable earnings and cash flow. This strategy enables the company to pay expenses, make principal and interest payments on its outstanding indebtedness, and make distributions to stockholders that grow over time. Additionally, Gladstone Capital Corp also aims to provide its stockholders with long-term capital appreciation by investing in equity securities of businesses that can grow over time.
Tracing Gladstone Capital Corp's Dividend History
Since 2001, Gladstone Capital Corp has upheld a consistent dividend payment record, with dividends currently being distributed monthly. The chart below illustrates the annual Dividends Per Share for tracking historical trends.
Understanding Gladstone Capital Corp's Dividend Yield and Growth
As of the present, Gladstone Capital Corp boasts a 12-month trailing dividend yield of 8.84% and a 12-month forward dividend yield of 9.65%. This indicates a projected increase in dividend payments over the next 12 months.
Over the past three years, Gladstone Capital Corp's annual dividend growth rate was -1.80%. This rate increased to -1.50% per year over a five-year horizon. Over the past decade, the company's annual dividends per share growth rate stands at -0.60%. Based on the company's dividend yield and five-year growth rate, the 5-year yield on cost of Gladstone Capital Corp stock is approximately 8.20% as of today.
Evaluating Dividend Sustainability: Payout Ratio and Profitability
The sustainability of a dividend is often assessed by examining the company's payout ratio. The dividend payout ratio gives an insight into the portion of earnings the company distributes as dividends. A lower ratio suggests that the company retains a significant part of its earnings, ensuring the availability of funds for future growth and unexpected downturns. As of 2023-06-30, Gladstone Capital Corp's dividend payout ratio is 0.91, which could indicate potential sustainability issues.
Furthermore, Gladstone Capital Corp's profitability rank provides insights into the company's earnings prowess relative to its peers. As of 2023-06-30, the company's profitability rank is 4 out of 10, suggesting potential sustainability issues. The company has reported net profit in 9 out of the past 10 years.
Assessing Future Prospects: Growth Metrics
For dividends to be sustainable, a company must demonstrate robust growth metrics. Gladstone Capital Corp's growth rank of 4 out of 10 suggests limited growth prospects, which could impact dividend sustainability.
Revenue is vital for any company, and Gladstone Capital Corp's revenue per share, combined with the 3-year revenue growth rate, indicates a strong revenue model. However, the company's revenue has increased by approximately -6.20% per year on average, a rate that underperforms approximately 66.04% of global competitors.
The company's 3-year EPS growth rate reveals its capability to grow its earnings, a critical component for sustaining dividends in the long run. During the past three years, Gladstone Capital Corp's earnings increased by approximately -5.20% per year on average, a rate that underperforms approximately 62.22% of global competitors.
Conclusion
While Gladstone Capital Corp has a consistent history of dividend payments, its growth metrics and payout ratio raise questions about the sustainability of its dividends. With a high payout ratio and relatively low profitability and growth ranks, investors should exercise caution. For those seeking high-dividend yield stocks, GuruFocus Premium users can utilize the High Dividend Yield Screener.
This article first appeared on GuruFocus.
