A Deep Dive Into PNNT's Dividend Performance and Sustainability
Pennant Park Investment Corp (PNNT, Financial) recently announced a dividend of $0.07 per share, payable on 2023-11-01, with the ex-dividend date set for 2023-10-16. As investors anticipate this forthcoming payment, it's crucial to examine the company's dividend history, yield, and growth rates. Utilizing data from GuruFocus, this article delves into Pennant Park Investment Corp's dividend performance and evaluates its sustainability.
What Does Pennant Park Investment Corp Do?
Pennant Park Investment Corp is a closed-end, non-diversified investment company. It aims to generate current income and capital appreciation while seeking to preserve capital through debt and equity investments. The company primarily invests in US middle-market companies that offer attractive risk-reward to investors and strives to create a diversified portfolio that includes senior secured debt, mezzanine debt, and equity investments. Most of its revenue is generated from interest and dividends received from its investments.
A Glimpse at Pennant Park Investment Corp's Dividend History
Pennant Park Investment Corp has upheld a consistent dividend payment record since 2007, with dividends currently distributed on a monthly basis. The following chart shows annual Dividends Per Share for tracking historical trends.
Breaking Down Pennant Park Investment Corp's Dividend Yield and Growth
As of today, Pennant Park Investment Corp has a 12-month trailing dividend yield of 11.84% and a 12-month forward dividend yield of 12.93%. This suggests an expectation of increased dividend payments over the next 12 months.
Over the past three years, Pennant Park Investment Corp's annual dividend growth rate was -8.30%. Over a five-year horizon, this rate decreased to -9.10% per year. And over the past decade, Pennant Park Investment Corp's annual dividends per share growth rate stands at -8.80%. Given the company's dividend yield and five-year growth rate, the 5-year yield on cost of Pennant Park Investment Corp stock as of today is approximately 7.35%.
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 2023-06-30, Pennant Park Investment Corp's dividend payout ratio is 0.00.
Pennant Park Investment Corp's profitability rank, offers an understanding of the company's earnings prowess relative to its peers. GuruFocus ranks Pennant Park Investment Corp's profitability 4 out of 10 as of 2023-06-30, suggesting the dividend may not be sustainable. The company has reported net profit in 7 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. Pennant Park Investment Corp's growth rank of 4 out of 10 suggests that the company has poor growth prospects and thus, the dividend may not be sustainable.
Next Steps
Given Pennant Park Investment Corp's dividend payments, dividend growth rate, payout ratio, profitability, and growth metrics, it's crucial for investors to monitor these factors to make informed decisions. While the company has a consistent dividend payment record, its negative growth rate and low profitability rank raise concerns about the sustainability of future dividends. Therefore, investors should carefully analyze these factors before making investment decisions.
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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.
