Assessing the Sustainability of Liberty All Star Equity Fund's Dividends
Liberty All Star Equity Fund (USA, Financial) recently announced a dividend of $0.17 per share, payable on 2024-03-04, with the ex-dividend date set for 2024-01-18. 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 Liberty All Star Equity Fund's dividend performance and assess its sustainability.
Company Overview
Liberty All Star Equity Fund is a diversified closed-end fund, aiming to provide a high level of current income and long-term capital appreciation. The fund invests across a broad range of sectors, thus offering exposure to a wide spectrum of industries. Sectors include financials, information technology, healthcare, consumer discretionary, and many more, reflecting a strategy of diversification to mitigate sector-specific risks.
Examining the Dividend History
Liberty All Star Equity Fund has a long-standing tradition of distributing dividends, having done so consistently since 1987. The dividends are paid quarterly, a factor that might appeal to investors seeking regular income streams. Below is a chart illustrating the annual Dividends Per Share to track historical trends, providing insight into the fund's dividend stability and growth.
Dividend Yield and Growth Insights
Liberty All Star Equity Fund boasts a 12-month trailing dividend yield of 9.16% and a 12-month forward dividend yield of 10.19%. These figures suggest a bullish outlook for the fund's dividend payments over the next year. Over the past three years, the fund's annual dividend growth rate has been 1.50%, and it shows a more robust growth over a five-year period, at 4.40% per year. Consequently, the 5-year yield on cost for Liberty All Star Equity Fund is an impressive 11.36% as of today.
Dividend Sustainability: Payout Ratio and Profitability
Evaluating the sustainability of Liberty All Star Equity Fund's dividends involves examining the payout ratio, which currently stands at 0.62. This indicates that the fund retains a fair portion of its earnings, potentially supporting future growth and providing a buffer during downturns. However, the fund's profitability rank is low, at 2 out of 10, which could raise concerns about the long-term sustainability of its dividends, given that the company has reported net profit in only 4 out of the past 10 years.
Future Growth Prospects
For dividends to be sustainable, a company must demonstrate strong growth prospects. Unfortunately, Liberty All Star Equity Fund's growth rank is also at a low 2 out of 10. This ranking suggests that the fund's future growth may be limited, which could impact the ability to maintain or increase dividend payments over time.
Investor Takeaway
Liberty All Star Equity Fund's dividend payments, growth rate, payout ratio, and profitability rank paint a mixed picture for investors. While the fund has a history of consistent dividend payments and an attractive yield on cost, its low profitability and growth ranks could be a cause for concern regarding dividend sustainability. Investors should weigh these factors carefully when considering the fund as a potential addition to their income-generating portfolio. For further research, GuruFocus Premium users can utilize the High Dividend Yield Screener to discover more high-dividend yield investment opportunities.
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.
