Insights into the Dividend Performance and Sustainability of HFRO
Highland Opportunities and Income Fund (HFRO, Financial) recently announced a dividend of $0.08 per share, payable on 2023-10-31, with the ex-dividend date set for 2023-10-23. 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 delve into Highland Opportunities and Income Fund's dividend performance and assess its sustainability.
What Does Highland Opportunities and Income Fund Do?
Highland Opportunities and Income Fund is a non-diversified, closed-end management investment company. Its investment objective is to provide a high level of current income, consistent with the preservation of capital. The company's portfolio of investments spans various industries such as financial, chemicals, energy, healthcare, industrial, manufacturing, and others.
A Glimpse at Highland Opportunities and Income Fund's Dividend History
Highland Opportunities and Income Fund has maintained a consistent dividend payment record since 2000. Dividends are currently distributed on a monthly basis. Here is a chart showing annual Dividends Per Share for tracking historical trends.
Breaking Down Highland Opportunities and Income Fund's Dividend Yield and Growth
As of today, Highland Opportunities and Income Fund currently has a 12-month trailing dividend yield of 13.05% and a 12-month forward dividend yield of 13.05%. This suggests an expectation of same dividend payments over the next 12 months.
Highland Opportunities and Income Fund's dividend yield of 13.05% is near a 10-year high and outperforms 90.23% of global competitors in the Asset Management industry, suggesting that the company's dividend yield stands out as an attractive proposition for income investors.
Based on Highland Opportunities and Income Fund's dividend yield and five-year growth rate, the 5-year yield on cost of Highland Opportunities and Income Fund stock as of today is approximately 13.05%.
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 2023-06-30, Highland Opportunities and Income Fund's dividend payout ratio is 0.00.
Highland Opportunities and Income Fund's profitability rank, offers an understanding of the company's earnings prowess relative to its peers. GuruFocus ranks Highland Opportunities and Income Fund'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 5 years out of past 10 years.
Growth Metrics: The Future Outlook
To ensure the sustainability of dividends, a company must have robust growth metrics. Highland Opportunities and Income 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 Highland Opportunities and Income Fund's revenue per share, combined with the 3-year revenue growth rate, indicates a strong revenue model. Highland Opportunities and Income Fund's revenue has increased by approximately -2.90% per year on average, a rate that underperforms approximately 62.61% 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, Highland Opportunities and Income Fund's earnings increased by approximately -5.40% per year on average, a rate that underperforms approximately 62.59% of global competitors.
Conclusion
While Highland Opportunities and Income Fund's dividend yield is attractive, the company's low profitability and growth ranks alongside its negative revenue and EPS growth rates suggest potential challenges in sustaining the dividend. Investors should consider these factors when evaluating the sustainability of HFRO's dividends. GuruFocus Premium users can screen for high-dividend yield stocks using the High Dividend Yield Screener.
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.
