An In-depth Look at MFS Charter Income Trust's Dividend Performance and Sustainability
MFS Charter Income Trust (MCR, Financial) recently announced a dividend of $0.04 per share, payable on 2023-10-31, with the ex-dividend date set for 2023-10-17. As investors look forward to this upcoming payment, it's also crucial to delve into the company's dividend history, yield, and growth rates. Using data from GuruFocus, we present an analysis of MFS Charter Income Trust's dividend performance and its potential sustainability.
Understanding MFS Charter Income Trust's Operations
MFS Charter Income Trust is a US-based closed-end fund. Its primary objective is to seek high current income. The fund invests its assets in various 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. The portfolio comprises investments in diverse sectors such as aerospace, airlines, automotive, building, business services, chemicals, electronics, among others.
Tracing MFS Charter Income Trust's Dividend History
Since 1989, MFS Charter Income Trust has maintained a consistent dividend payment record, currently distributing dividends on a monthly basis. The chart below illustrates the annual Dividends Per Share for historical trends tracking.
Examining MFS Charter Income Trust's Dividend Yield and Growth
As of today, MFS Charter Income Trust has a 12-month trailing dividend yield of 9.39% and a 12-month forward dividend yield of 9.37%, indicating a potential decrease in dividend payments over the next 12 months. Over the past three years, the company's annual dividend growth rate was -5.90%, while the five-year rate stands at -3.60% per year. Based on these figures, the 5-year yield on cost of MFS Charter Income Trust stock is approximately 7.82%.
Evaluating Dividend Sustainability: Payout Ratio and Profitability
The sustainability of a dividend is often gauged by examining the company's payout ratio. The dividend payout ratio indicates the portion of earnings distributed as dividends. A lower ratio suggests that the company retains a significant part of its earnings, providing a cushion for future growth and unexpected downturns. As of 2023-05-31, MFS Charter Income Trust's dividend payout ratio is 0.00. The company's profitability rank of 2 out of 10, along with net profit reported in 4 out of the past 10 years, raises questions about the sustainability of the dividend.
Future Outlook: Growth Metrics
For dividends to be sustainable, the company must demonstrate strong growth metrics. However, MFS Charter Income Trust's growth rank of 2 out of 10 suggests poor growth prospects, casting further doubt on the sustainability of its dividend.
Conclusion
While MFS Charter Income Trust has a long history of consistent dividend payments, its negative growth rates, low profitability rank, and poor growth prospects raise concerns about the sustainability of its dividends. Investors considering MFS Charter Income Trust for its dividends should carefully assess these factors. For those seeking high-dividend yield stocks, consider using the High Dividend Yield Screener available for GuruFocus Premium users.
This article, generated by GuruFocus, is designed to provide general insights and is not tailored financial advice. Our commentary is rooted in historical data and analyst projections, utilizing an impartial methodology, and is not intended to serve as specific investment guidance. It does not formulate a recommendation to purchase or divest any stock and does not consider individual investment objectives or financial circumstances. Our objective is to deliver long-term, fundamental data-driven analysis. Be aware that our analysis might not incorporate the most recent, price-sensitive company announcements or qualitative information. GuruFocus holds no position in the stocks mentioned herein.
