Scrutinizing the Sustainability and Growth Prospects of FFC's Dividends
Flaherty & Crumrine Preferred and Income Securities Fund Incorporated (FFC, Financial) recently announced a dividend of $0.08 per share, payable on 2023-09-29, with the ex-dividend date set for 2023-09-21. 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 Flaherty & Crumrine Preferred and Income Securities Fund Incorporated's dividend performance and assess its sustainability.
Understanding Flaherty & Crumrine Preferred and Income Securities Fund Incorporated
Flaherty & Crumrine Preferred and Income Securities Fund Incorporated is a diversified, closed-end management investment company. The fund's investment objective is to provide its common shareholders with high current income consistent with the preservation of capital. It invests primarily in a diversified portfolio of preferred securities.
Examining Flaherty & Crumrine Preferred and Income Securities Fund Incorporated's Dividend History
Flaherty & Crumrine Preferred and Income Securities Fund Incorporated has maintained a consistent dividend payment record since 2003. Dividends are currently distributed on a monthly basis. Below is a chart showing annual Dividends Per Share for tracking historical trends.
Breaking Down Flaherty & Crumrine Preferred and Income Securities Fund Incorporated's Dividend Yield and Growth
As of today, Flaherty & Crumrine Preferred and Income Securities Fund Incorporated currently has a 12-month trailing dividend yield of 8.54% and a 12-month forward dividend yield of 8.20%. This suggests an expectation of decreased dividend payments over the next 12 months.
Over the past three years, Flaherty & Crumrine Preferred and Income Securities Fund Incorporated's annual dividend growth rate was 1.20%. Based on Flaherty & Crumrine Preferred and Income Securities Fund Incorporated's dividend yield and five-year growth rate, the 5-year yield on cost of Flaherty & Crumrine Preferred and Income Securities Fund Incorporated stock as of today is approximately 8.54%.
Evaluating 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 2023-05-31, Flaherty & Crumrine Preferred and Income Securities Fund Incorporated's dividend payout ratio is 0.00.
Flaherty & Crumrine Preferred and Income Securities Fund Incorporated's profitability rank, offers an understanding of the company's earnings prowess relative to its peers. GuruFocus ranks Flaherty & Crumrine Preferred and Income Securities Fund Incorporated's profitability 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 past 10 years.
Assessing Growth Metrics: The Future Outlook
To ensure the sustainability of dividends, a company must have robust growth metrics. Flaherty & Crumrine Preferred and Income Securities Fund Incorporated's growth rank of 2 out of 10 suggests that the company has poor growth prospects and thus, the dividend may not be sustainable.
Concluding Thoughts
While Flaherty & Crumrine Preferred and Income Securities Fund Incorporated has a track record of consistent dividend payments, the future sustainability of these dividends seems uncertain. The company's low profitability and growth ranks, coupled with a zero payout ratio, indicate potential challenges in maintaining its current dividend yield. Therefore, investors should carefully consider these factors before making investment decisions.
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