Assessing the Sustainability of Western Asset Diversified Income Fund's Dividend
Western Asset Diversified Income Fund (WDI, Financial) recently announced a dividend of $0.14 per share, payable on 2024-03-01, with the ex-dividend date set for 2024-02-21. 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 look into Western Asset Diversified Income Fund's dividend performance and assess its sustainability.
What Does Western Asset Diversified Income Fund Do?
Western Asset Diversified Income Fund is a newly-organized, diversified, closed-end management investment company. The fund's primary investment objective is to seek high current income.
A Glimpse at Western Asset Diversified Income Fund's Dividend History
Western Asset Diversified Income Fund has maintained a consistent dividend payment record since 2021. Dividends are currently distributed on a monthly basis. Below is a chart showing annual Dividends Per Share for tracking historical trends.
Breaking Down Western Asset Diversified Income Fund's Dividend Yield and Growth
As of today, Western Asset Diversified Income Fund currently has a 12-month trailing dividend yield of 11.38% and a 12-month forward dividend yield of 12.11%. This suggests an expectation of increased dividend payments over the next 12 months.
Based on Western Asset Diversified Income Fund's dividend yield and five-year growth rate, the 5-year yield on cost of Western Asset Diversified Income Fund stock as of today is approximately 11.38%.
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, Western Asset Diversified Income Fund's dividend payout ratio is 1.36, which may suggest that the company's dividend may not be sustainable.
Western Asset Diversified Income Fund's profitability rank, offers an understanding of the company's earnings prowess relative to its peers. GuruFocus ranks Western Asset Diversified Income Fund's profitability 1 out of 10 as of 2023-06-30, suggesting that the dividend may not be sustainable. The company has reported net profit in 1 year out of the past 10 years.
Growth Metrics: The Future Outlook
To ensure the sustainability of dividends, a company must have robust growth metrics. Western Asset Diversified Income Fund's growth rank of 1 out of 10 suggests that the company has poor growth prospects and thus, the dividend may not be sustainable.
Next Steps
Considering Western Asset Diversified Income Fund's dividend payments, dividend growth rate, payout ratio, profitability, and growth metrics, value investors should carefully evaluate the potential risks and rewards of investing in the fund. While the high dividend yield may appear attractive, the underlying financial health and growth prospects of the fund raise questions about the long-term sustainability of these dividend payments. Investors are encouraged to perform their due diligence and consider whether Western Asset Diversified Income Fund aligns with their investment strategy and risk tolerance. For those interested in high-dividend yield opportunities, GuruFocus Premium users can screen for such 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.
