Is THQ's Dividend Sustainable? A Comprehensive Review of its Dividend History, Yield, and Growth
Tekla Healthcare Opportunities Fund (THQ, Financial) recently announced a dividend of $0.11 per share, payable on 2023-09-29, with the ex-dividend date set for 2023-09-20. 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 deep dive into Tekla Healthcare Opportunities Funds dividend performance and assess its sustainability.
What Does Tekla Healthcare Opportunities Fund Do?
Tekla Healthcare Opportunities Fund is a non-diversified closed-end fund in the United States. The fund's investment objective is to seek current income and long-term capital appreciation through investments in U.S. and non-U.S. companies in the healthcare industry (including equity securities, debt securities, and pooled investment vehicles). The fund invests primarily in securities of public and private companies.
A Glimpse at Tekla Healthcare Opportunities Fund's Dividend History
Tekla Healthcare Opportunities Fund has maintained a consistent dividend payment record since 2014. Dividends are currently distributed on a monthly basis. Below is a chart showing annual Dividends Per Share for tracking historical trends.
Breaking Down Tekla Healthcare Opportunities Fund's Dividend Yield and Growth
As of today, Tekla Healthcare Opportunities Fund currently has a 12-month trailing dividend yield of 7.59% and a 12-month forward dividend yield of 7.59%. This suggests an expectation of same dividend payments over the next 12 months.
Based on Tekla Healthcare Opportunities Fund's dividend yield and five-year growth rate, the 5-year yield on cost of Tekla Healthcare Opportunities Fund stock as of today is approximately 7.59%.
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 2023-03-31, Tekla Healthcare Opportunities Fund's dividend payout ratio is 0.00.
Tekla Healthcare Opportunities Fund's profitability rank, offers an understanding of the company's earnings prowess relative to its peers. GuruFocus ranks Tekla Healthcare Opportunities Fund's profitability 2 out of 10 as of 2023-03-31, suggesting the dividend may not be sustainable. The company has reported net profit in 4 years out of past 10 years.
Growth Metrics: The Future Outlook
To ensure the sustainability of dividends, a company must have robust growth metrics. Tekla Healthcare Opportunities Fund's growth rank of 2 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 Tekla Healthcare Opportunities Fund's revenue per share, combined with the 3-year revenue growth rate, indicates a strong revenue model. Tekla Healthcare Opportunities Fund's revenue has increased by approximately -29.00% per year on average, a rate that underperforms than approximately 82.63% 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, Tekla Healthcare Opportunities Fund's earnings increased by approximately -28.30% per year on average, a rate that underperforms than approximately 80.48% of global competitors.
Conclusion
While Tekla Healthcare Opportunities Fund's consistent dividend payout history and high yield are attractive, the company's low profitability and growth rank, along with a declining revenue and EPS growth rate, raise questions about the sustainability of its dividends in the long run. Investors should consider these factors carefully before making investment decisions. GuruFocus Premium users can screen for high-dividend yield stocks using the High Dividend Yield Screener.
