Understanding the Dividend Landscape of Pennant Park Investment Corp
Pennant Park Investment Corp (PNNT, Financial) recently announced a dividend of $0.21 per share, payable on 2023-10-02, with the ex-dividend date set for 2023-09-15. 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 deep dive into Pennant Park Investment Corp's dividend performance and assess its sustainability.
What Does Pennant Park Investment Corp Do?
Pennant Park Investment Corp is a closed-end, non-diversified investment company. Its investment objective is to generate current income and capital appreciation also seeking to preserve capital through debt and equity investments. The company focuses on investing in US middle-market companies that offer attractive risk-reward to investors and to create a diversified portfolio that includes senior secured debt, mezzanine debt, and equity investments. It generates most of its revenue from interest and dividends received from investments made.
A Glimpse at Pennant Park Investment Corp's Dividend History
Pennant Park Investment Corp has maintained a consistent dividend payment record since 2007. Dividends are currently distributed on a quarterly basis. Below is a chart showing annual Dividends Per Share for tracking historical trends.
Breaking Down Pennant Park Investment Corp's Dividend Yield and Growth
As of today, Pennant Park Investment Corp currently has a 12-month trailing dividend yield of 10.50% and a 12-month forward dividend yield of 11.38%. This suggests an expectation of increase dividend payments over the next 12 months.
Over the past three years, Pennant Park Investment Corp's annual dividend growth rate was -8.30%. Extended to a five-year horizon, this rate decreased to -9.10% per year. Over the past decade, Pennant Park Investment Corp's annual dividends per share growth rate stands at -8.80%.
Based on Pennant Park Investment Corp's dividend yield and five-year growth rate, the 5-year yield on cost of Pennant Park Investment Corp stock as of today is approximately 6.52%.
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, Pennant Park Investment Corp's dividend payout ratio is 0.00.
Pennant Park Investment Corp's profitability rank, offers an understanding of the company's earnings prowess relative to its peers. GuruFocus ranks Pennant Park Investment Corp's profitability 3 out of 10 as of 2023-06-30, suggesting the dividend may not be sustainable. The company has reported net profit in 7 years out of past 10 years.
Growth Metrics: The Future Outlook
To ensure the sustainability of dividends, a company must have robust growth metrics. Pennant Park Investment Corp's growth rank of 3 out of 10 suggests that the company has poor growth prospects and thus, the dividend may not be sustainable.
Next Steps
Considering Pennant Park Investment Corp's dividend payments, dividend growth rate, payout ratio, profitability, and growth metrics, investors should be cautious. While the company has a consistent dividend payment record, its negative growth rates and low profitability and growth ranks indicate potential challenges in maintaining its dividend payout. Investors should closely monitor these factors while making investment decisions. GuruFocus Premium users can screen for high-dividend yield stocks using the High Dividend Yield Screener.
