An In-depth Analysis of the Fund's Dividend Performance and Sustainability
abrdn Income Credit Strategies Fund (ACP, Financial) recently announced a dividend of $0.1 per share, payable on 2023-09-29, with the ex-dividend date set for 2023-09-21. As investors anticipate this forthcoming payment, it's crucial to examine the fund's dividend history, yield, and growth rates. Let's delve into the dividend performance of abrdn Income Credit Strategies Fund using the data from GuruFocus, and assess its sustainability.
About abrdn Income Credit Strategies Fund
abrdn Income Credit Strategies Fund is a diversified, closed-end management investment company. It primarily seeks to generate a high level of current income, with capital appreciation as a secondary objective. The fund's investment strategy revolves mainly around loan and debt instruments.
A Snapshot of abrdn Income Credit Strategies Fund's Dividend History
Since 2011, abrdn Income Credit Strategies Fund has maintained a consistent dividend payment record, with dividends currently distributed on a monthly basis. The following chart illustrates the annual Dividends Per Share for tracking historical trends.
Understanding the Dividend Yield and Growth of abrdn Income Credit Strategies Fund
As of today, abrdn Income Credit Strategies Fund boasts a 12-month trailing dividend yield and a 12-month forward dividend yield of 16.92%, indicating an expectation of consistent dividend payments over the next 12 months.
Over the past three years, the fund's annual dividend growth rate was -5.90%. However, this rate increased to -3.40% per year when extended to a five-year horizon. Based on the fund's dividend yield and five-year growth rate, the 5-year yield on cost of abrdn Income Credit Strategies Fund stock as of today is approximately 14.23%.
Assessing Dividend Sustainability: Payout Ratio and Profitability
To gauge the sustainability of the dividend, it's essential to examine the fund's payout ratio. The dividend payout ratio indicates the portion of earnings the fund distributes as dividends. A lower ratio suggests the fund retains a significant part of its earnings, which is beneficial for future growth and unexpected downturns. As of 2023-04-30, abrdn Income Credit Strategies Fund's dividend payout ratio is 0.00.
The profitability rank of abrdn Income Credit Strategies Fund offers insights into the fund's earnings prowess relative to its peers. As of 2023-04-30, the fund's profitability rank is 2 out of 10, suggesting the dividend may not be sustainable. The fund has reported net profit in 3 out of the past 10 years.
Future Prospects: Growth Metrics
A company must have robust growth metrics to ensure dividend sustainability. The growth rank of abrdn Income Credit Strategies Fund is 2 out of 10, indicating poor growth prospects and potential dividend instability. The fund's revenue per share and 3-year revenue growth rate suggest a strong revenue model, with an average annual increase of approximately -171.70%, a rate that underperforms approximately 98.88% of global competitors.
The fund's 3-year EPS growth rate indicates its ability to grow earnings, a critical component for sustaining dividends in the long run. Over the past three years, the fund's earnings have increased by approximately -139.70% per year on average, a rate that underperforms approximately 96.86% of global competitors.
Conclusion
While abrdn Income Credit Strategies Fund has a strong dividend yield and a consistent history of dividend payments, the fund's negative growth rates and low profitability rank raise concerns about the sustainability of its dividends. The fund's payout ratio is also at 0.00, indicating no earnings are being distributed as dividends. These factors suggest that investors should exercise caution and perform a thorough analysis before investing in the fund for its dividends. Remember, GuruFocus Premium users can screen for high-dividend yield stocks using the High Dividend Yield Screener.
