A Comprehensive Analysis of MFS Charter Income Trust's Dividend Performance and Sustainability
MFS Charter Income Trust (MCR, Financial) recently announced a dividend of $0.05 per share, payable on 2023-09-29, with the ex-dividend date set for 2023-09-12. As investors eagerly anticipate this upcoming payment, it's a fitting time to delve into the company's dividend history, yield, and growth rates. Utilizing data from GuruFocus, let's evaluate MFS Charter Income Trusts dividend performance and assess its sustainability.
Understanding MFS Charter Income Trust's Business Model
MFS Charter Income Trust is a United States-based closed-end fund. Its primary objective is to seek high current income. The fund invests in a diverse array of debt instruments, including corporate bonds of U.S. and foreign issuers, U.S. Government securities, foreign government securities, mortgage-backed and other asset-backed securities of U.S. and foreign issuers, and debt instruments of issuers located in emerging market countries. Its portfolio comprises investments across various sectors such as aerospace, airlines, automotive, building, business services, chemicals, electronics, and others.
Exploring MFS Charter Income Trust's Dividend History
Since 1989, MFS Charter Income Trust has maintained a consistent dividend payment record, distributing dividends on a monthly basis. Let's take a look at the annual Dividends Per Share chart to track these historical trends.
Assessing MFS Charter Income Trust's Dividend Yield and Growth
As of today, MFS Charter Income Trust boasts a 12-month trailing dividend yield of 9.03% and a 12-month forward dividend yield of 8.98%. This indicates an expected decrease in dividend payments over the next 12 months.
Over the past three years, MFS Charter Income Trust's annual dividend growth rate was -5.90%. However, over a five-year horizon, this rate has improved to -3.60% per year. Based on the company's dividend yield and five-year growth rate, the 5-year yield on cost of MFS Charter Income Trust stock is approximately 7.52% as of today.
Is MFS Charter Income Trust's Dividend Sustainable?
The sustainability of a dividend can be assessed by evaluating the company's payout ratio. The dividend payout ratio provides insight into the proportion of earnings the company distributes as dividends. A lower ratio suggests that the company retains a significant part of its earnings for future growth and unexpected downturns. As of 2023-05-31, MFS Charter Income Trust's dividend payout ratio is 0.00.
MFS Charter Income Trust's profitability rank of 2 out of 10 as of 2023-05-31 suggests the dividend may not be sustainable. Over the past 10 years, the company has reported net profit in 4 years.
Examining MFS Charter Income Trust's Growth Metrics
To ensure the sustainability of dividends, a company must demonstrate robust growth metrics. MFS Charter Income Trust's growth rank of 2 out of 10 suggests that the company has poor growth prospects, potentially jeopardizing the sustainability of its dividend.
Concluding Thoughts
While MFS Charter Income Trust has a commendable dividend payment history, its current dividend yield, growth rate, payout ratio, profitability, and growth metrics raise questions about the sustainability of its dividends. Therefore, investors should closely monitor these factors to make informed decisions. GuruFocus Premium users can screen for high-dividend yield stocks using the High Dividend Yield Screener.
