Unveiling Fidus Investment Corp's Dividend Performance: A Comprehensive Analysis
Delving into the Dividend History, Yield, and Sustainability of Fidus Investment Corp (NASDAQ:FDUS)
Fidus Investment Corp(NASDAQ:FDUS) recently announced a dividend of $0.62 per share, payable on 2023-09-27, with the ex-dividend date set for 2023-09-19. 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 Fidus Investment Corps dividend performance and assess its sustainability.
Understanding Fidus Investment Corp's Business Model
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Fidus Investment Corp is an externally managed, closed-end, non-diversified management investment company that has elected to be treated as a business development company. The company provides customized debt and equity financing solutions to lower middle-market companies, which management generally defines as U.S. based companies with revenues between $10 million and $150 million. The company invests in companies that possess some or all of the following attributes: predictable revenues; positive cash flows; defensible market positions; diversified customer and supplier bases; and management teams with operating discipline.
Tracing Fidus Investment Corp's Dividend History
Fidus Investment Corp has maintained a consistent dividend payment record since 2011. Dividends are currently distributed on a quarterly basis. Below is a chart showing annual Dividends Per Share for tracking historical trends.
Dissecting Fidus Investment Corp's Dividend Yield and Growth
As of today, Fidus Investment Corp currently has a 12-month trailing dividend yield of 10.69% and a 12-month forward dividend yield of 12.06%. This suggests an expectation of increased dividend payments over the next 12 months.
Over the past three years, Fidus Investment Corp's annual dividend growth rate was 0.60%. Extended to a five-year horizon, this rate decreased to -2.10% per year. And over the past decade, Fidus Investment Corp's annual dividends per share growth rate stands at -0.70%. Based on Fidus Investment Corp's dividend yield and five-year growth rate, the 5-year yield on cost of Fidus Investment Corp stock as of today is approximately 9.40%.
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, Fidus Investment Corp's dividend payout ratio is 1.18. This may suggest that the company's dividend may not be sustainable.
Fidus Investment Corp's profitability rank, offers an understanding of the company's earnings prowess relative to its peers. GuruFocus ranks Fidus Investment Corp's profitability 5 out of 10 as of 2023-06-30, suggesting fair profitability. The company has reported positive net income for each of year over the past decade, further solidifying its high profitability.
Exploring Growth Metrics: The Future Outlook
To ensure the sustainability of dividends, a company must have robust growth metrics. Fidus Investment Corp's growth rank of 5 out of 10 suggests that the company has a fair growth outlook.
Revenue is the lifeblood of any company, and Fidus Investment Corp's revenue per share, combined with the 3-year revenue growth rate, indicates a strong revenue model. Fidus Investment Corp's revenue has increased by approximately -0.50% per year on average, a rate that underperforms approximately 58.82% 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, Fidus Investment Corp's earnings increased by approximately -9.70% per year on average, a rate that underperforms approximately 66.79% of global competitors. Lastly, the company's 5-year EBITDA growth rate of 2.60%, underperforms approximately 63.11% of global competitors.
Wrapping Up
In conclusion, while Fidus Investment Corp has a commendable dividend yield and a consistent dividend payment history, the sustainability of its dividends is questionable due to a high payout ratio and less than stellar growth metrics. Therefore, investors should exercise caution and conduct further due diligence before investing in the company purely for its dividends. GuruFocus Premium users can screen for high-dividend yield stocks using the High Dividend Yield Screener.
This article first appeared on GuruFocus.
