Assessing Dividend Sustainability and Growth Prospects
First Trust/Aberdeen Global Oppo Income (FAM, Financial) has recently announced a dividend of $0.06 per share, payable on 2023-10-16, with the ex-dividend date set for 2023-10-02. As investors anticipate this forthcoming payment, it's pertinent to evaluate the company's dividend track record, yield, and growth rates. This article leverages data from GuruFocus to delve into First Trust/Aberdeen Global Oppo Income's dividend performance and assess its sustainability.
Company Overview
First Trust/Aberdeen Global Oppo Income is a US-based diversified, closed-end management investment company. The fund's primary objective is to seek high current income, with a secondary objective of capital appreciation. The fund aims to achieve these goals by investing in global bond markets through a diversified portfolio of investment-grade and below-investment-grade government and corporate debt securities.
First Trust/Aberdeen Global Oppo Income's Dividend History
First Trust/Aberdeen Global Oppo Income has maintained a consistent dividend payment record since 2005. Dividends are currently distributed on a monthly basis. The chart below shows the annual Dividends Per Share for tracking historical trends.
First Trust/Aberdeen Global Oppo Income's Dividend Yield and Growth
As of today, First Trust/Aberdeen Global Oppo Income has a 12-month trailing dividend yield of 10.79% and a 12-month forward dividend yield of 12.63%. This suggests an expectation of increased dividend payments over the next 12 months.
Over the past three years, the company's annual dividend growth rate was -9.50%. When extended to a five-year horizon, this rate increased to -3.60% per year. Based on First Trust/Aberdeen Global Oppo Income's dividend yield and five-year growth rate, the 5-year yield on cost of the stock as of today is approximately 8.97%.
Assessing Dividend Sustainability: 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 2023-06-30, First Trust/Aberdeen Global Oppo Income's dividend payout ratio is 0.85, which may suggest that the company's dividend may not be sustainable.
First Trust/Aberdeen Global Oppo Income's profitability rank offers an understanding of the company's earnings prowess relative to its peers. GuruFocus ranks the company's profitability 2 out of 10 as of 2023-06-30, suggesting the dividend may not be sustainable. The company has reported net profit in 3 years out of past 10 years.
Growth Metrics: The Future Outlook
To ensure the sustainability of dividends, a company must have robust growth metrics. First Trust/Aberdeen Global Oppo Income's growth rank of 2 out of 10 suggests that the company has poor growth prospects and thus, the dividend may not be sustainable.
Conclusion
In conclusion, while First Trust/Aberdeen Global Oppo Income has a consistent record of dividend payments, the sustainability of these dividends is questionable due to the high payout ratio and low profitability and growth ranks. Investors should carefully consider these factors before making investment decisions. GuruFocus Premium users can screen for high-dividend yield stocks using the High Dividend Yield Screener.
