Virtus Dividend, Interest & Premium Strategy Fund's Dividend Analysis
Delving into the Dividend Details of Virtus Dividend, Interest & Premium Strategy Fund (NYSE:NFJ)
Virtus Dividend, Interest & Premium Strategy Fund (NYSE:NFJ) recently announced a dividend of $0.25 per share, payable on 2023-12-22, with the ex-dividend date set for 2023-12-08. 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 look into Virtus Dividend, Interest & Premium Strategy Fund's dividend performance and assess its sustainability.
What Does Virtus Dividend, Interest & Premium Strategy Fund Do?
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Virtus Dividend, Interest & Premium Strategy Fund is a Massachusetts-based business trust. Its primary investment objective is to seek current income and gains, with a secondary objective of long-term capital appreciation. The fund pursues its investment objectives by investing in a diversified portfolio of dividend-paying common stocks and income-producing convertible securities.
A Glimpse at Virtus Dividend, Interest & Premium Strategy Fund's Dividend History
Virtus Dividend, Interest & Premium Strategy Fund has maintained a consistent dividend payment record since 2005. Dividends are currently distributed on a quarterly basis. Below is a chart showing annual Dividends Per Share for tracking historical trends.
Breaking Down Virtus Dividend, Interest & Premium Strategy Fund's Dividend Yield and Growth
As of today, Virtus Dividend, Interest & Premium Strategy Fund currently has a 12-month trailing dividend yield of 8.19% and a 12-month forward dividend yield of 8.19%. This suggests an expectation of the same dividend payments over the next 12 months.
Over the past three years, Virtus Dividend, Interest & Premium Strategy Fund's annual dividend growth rate was 2.90%. Extended to a five-year horizon, this rate decreased to -2.00% per year. Based on Virtus Dividend, Interest & Premium Strategy Fund's dividend yield and five-year growth rate, the 5-year yield on cost of Virtus Dividend, Interest & Premium Strategy Fund stock as of today is approximately 7.40%.
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 2023-01-31, Virtus Dividend, Interest & Premium Strategy Fund's dividend payout ratio is 0.00.
Virtus Dividend, Interest & Premium Strategy Fund's profitability rank, offers an understanding of the company's earnings prowess relative to its peers. GuruFocus ranks Virtus Dividend, Interest & Premium Strategy Fund's profitability 2 out of 10 as of 2023-01-31, suggesting the dividend may not be sustainable. The company has reported net profit in 4 years out of the past 10 years.
Growth Metrics: The Future Outlook
To ensure the sustainability of dividends, a company must have robust growth metrics. Virtus Dividend, Interest & Premium Strategy 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.
Next Steps for Investors
In conclusion, while Virtus Dividend, Interest & Premium Strategy Fund offers an attractive dividend yield, the company's low profitability and growth ranks raise concerns about the long-term sustainability of its dividend payments. The negative five-year dividend growth rate further complicates the picture. Investors should consider these factors along with their investment strategy and risk tolerance. For those seeking to diversify their portfolio with income-generating stocks, 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.
