Understanding the Dividend Dynamics of Pennant Park Investment Corp
Pennant Park Investment Corp (PNNT, Financial) recently announced a dividend of $0.07 per share, payable on 2024-02-01, with the ex-dividend date set for 2024-01-12. 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 Pennant Park Investment Corp's dividend performance and assess its sustainability.
What Does Pennant Park Investment Corp Do?
Pennant Park Investment Corp is a closed-end, non-diversified investment company. Its investment objective is to generate current income and capital appreciation also seeking to preserve capital through debt and equity investments. The company focuses on investing in United States middle-market companies that offer attractive risk-reward to investors and to create a diversified portfolio that includes senior secured debt, mezzanine debt, and equity investments. It generates the majority of its revenue from interest and dividends received from investments made.
A Glimpse at Pennant Park Investment Corp's Dividend History
Pennant Park Investment Corp has maintained a consistent dividend payment record since 2007. Dividends are currently distributed on a monthly basis. Below is a chart showing 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 currently has a 12-month trailing dividend yield of 11.53% and a 12-month forward dividend yield of 12.04%. 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 11.40%. Extended to a five-year horizon, this rate decreased to -0.80% per year. And over the past decade, Pennant Park Investment Corp's annual dividends per share growth rate stands at -7.20%.
Based on Pennant Park Investment Corp'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 11.08%.
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 2023-09-30, 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 3 out of 10 as of 2023-09-30, suggesting the dividend may not be sustainable. The company has reported net profit in 6 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 3 out of 10 suggests that the company has poor growth prospects and thus, the dividend may not be sustainable.
Revenue is the lifeblood of any company, and Pennant Park Investment Corp's revenue per share, combined with the 3-year revenue growth rate, indicates a strong revenue model. Pennant Park Investment Corp's revenue has decreased by approximately -28.10% per year on average, a rate that underperforms approximately 83.91% 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, Pennant Park Investment Corp's earnings decreased by approximately -29.40% per year on average, a rate that underperforms approximately 82.47% of global competitors.
Next Steps for Investors
Considering Pennant Park Investment Corp's dividend payments, dividend growth rate, payout ratio, profitability, and growth metrics, investors should weigh these factors when evaluating the stock's potential for their portfolios. The current high yield may be attractive, but the sustainability of these payments is questionable given the company's recent growth and profitability challenges. Value investors, in particular, may want to delve deeper into the company's financial health and market position before making an investment decision. GuruFocus Premium users can screen for high-dividend yield stocks using the High Dividend Yield Screener to find opportunities that align with their investment strategy.
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.
