Western Asset Inflation-Linked Opportunities and Income Fund's Dividend Analysis
Insights into the upcoming dividend, historical trends, and sustainability of dividends
Western Asset Inflation-Linked Opportunities and Income Fund (NYSE:WIW) recently announced a dividend of $0.06 per share, payable on 2023-11-30, with the ex-dividend date set for 2023-11-21. This announcement has drawn investor attention towards the company's dividend history, yield, and growth rates. In this article, we will use GuruFocus data to delve into Western Asset Inflation-Linked Opportunities and Income Fund's dividend performance and assess its sustainability.
Overview of Western Asset Inflation-Linked Opportunities and Income Fund
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Western Asset Inflation-Linked Opportunities and Income Fund is a diversified, closed-end management investment company. The primary investment objective is to provide current income for its shareholders, with capital appreciation as the secondary objective.
Western Asset Inflation-Linked Opportunities and Income Fund's Dividend History
Since 2004, Western Asset Inflation-Linked Opportunities and Income Fund has maintained a consistent dividend payment record, with dividends currently distributed on a monthly basis. The chart below shows the annual Dividends Per Share for tracking historical trends.
Dividend Yield and Growth of Western Asset Inflation-Linked Opportunities and Income Fund
As of today, Western Asset Inflation-Linked Opportunities and Income Fund has a 12-month trailing dividend yield of 8.72% and a 12-month forward dividend yield of 8.85%. This indicates an expectation of increased dividend payments over the next 12 months.
Western Asset Inflation-Linked Opportunities and Income Fund's dividend yield of 8.72% is near a 10-year high and outperforms 66.83% of global competitors in the Asset Management industry, making it an attractive proposition for income investors.
Over the past three years, the company's annual dividend growth rate was 13.60%. However, this rate decreased to 5.90% per year over a five-year horizon. Based on these figures, the 5-year yield on cost of Western Asset Inflation-Linked Opportunities and Income Fund stock is approximately 11.61%.
Assessing Dividend Sustainability: Payout Ratio and Profitability
The dividend payout ratio is a crucial metric for assessing dividend sustainability. It indicates 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 2023-05-31, Western Asset Inflation-Linked Opportunities and Income Fund's dividend payout ratio is 0.00.
Western Asset Inflation-Linked Opportunities and Income Fund'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 out of the past 10 years.
Growth Metrics and Future Outlook
For dividends to be sustainable, robust growth metrics are essential. However, Western Asset Inflation-Linked Opportunities and Income Fund's growth rank of 2 out of 10 suggests poor growth prospects, which could impact the sustainability of dividends.
Conclusion
While Western Asset Inflation-Linked Opportunities and Income Fund offers a high dividend yield, the company's low growth and profitability ranks raise concerns about the sustainability of future dividends. Investors should consider these factors before making decisions based on dividend yield alone. For more insights into high-dividend yield stocks, GuruFocus Premium users can use 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.
