Analysis of Dividend History, Yield, and Sustainability
MFS Special Value Trust (MFV, Financial) has recently announced a dividend of $0.04 per share, scheduled for payment on 2023-09-29, with the ex-dividend date set for 2023-09-12. In light of this announcement, it's an opportune time to delve into the company's dividend history, yield, and growth rates. Using data from GuruFocus, we'll take a closer look at MFS Special Value Trust's dividend performance and evaluate its sustainability.
What Does MFS Special Value Trust Do?
MFS Special Value Trust is a diversified closed-end management investment company. It primarily seeks high current income but also considers capital appreciation. The fund invests most of its assets in debt instruments, including below-investment-grade quality debt instruments. A portion of the fund's assets is also invested in equity securities. Its portfolio spans various sectors, including aerospace, broadcasting, business services, conglomerates, major banks, insurance, and others.
A Glimpse at MFS Special Value Trust's Dividend History
MFS Special Value Trust has a consistent dividend payment history dating back to 1994, with dividends currently distributed on a monthly basis. The chart below shows the annual Dividends Per Share for tracking historical trends.
Breaking Down MFS Special Value Trust's Dividend Yield and Growth
As of today, MFS Special Value Trust has a 12-month trailing dividend yield of 11.18% and a 12-month forward dividend yield of 11.10%. This indicates a potential decrease in dividend payments over the next 12 months. Over the past three years, MFS Special Value Trust's annual dividend growth rate was -3.50%, which increased to -3.30% per year over a five-year horizon. The 5-year yield on cost of MFS Special Value Trust stock as of today is approximately 9.45%.
The Sustainability Question: Payout Ratio and Profitability
The sustainability of MFS Special Value Trust's dividend can be evaluated by examining its payout ratio. The dividend payout ratio reflects the portion of earnings the company distributes as dividends. A lower ratio indicates that the company retains a significant part of its earnings, ensuring funds for future growth and unexpected downturns. As of 2023-04-30, MFS Special Value Trust's dividend payout ratio is 6.50, which may suggest that the company's dividend may not be sustainable. The company's profitability rank of 2 out of 10, as of 2023-04-30, also suggests that the dividend may not be sustainable. The company has reported net profit in 4 out of the past 10 years.
Growth Metrics: The Future Outlook
To ensure the sustainability of dividends, a company must demonstrate robust growth metrics. MFS Special Value Trust's growth rank of 2 out of 10 suggests that the company has poor growth prospects and thus, the dividend may not be sustainable.
Next Steps
Given MFS Special Value Trust's dividend payments, growth rate, payout ratio, profitability, and growth metrics, investors should be cautious about the sustainability of its dividends. The company's low profitability and growth ranks, coupled with a high payout ratio, indicate potential risks. Therefore, investors should consider these factors before making investment decisions. GuruFocus Premium users can screen for high-dividend yield stocks using the High Dividend Yield Screener.
