Assessing the Sustainability of PIMCO High Income Fund's Upcoming Dividend
PIMCO High Income Fund (PHK, Financial) recently announced a dividend of $0.05 per share, payable on 2024-03-01, with the ex-dividend date set for 2024-02-09. 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 PIMCO High Income Funds dividend performance and assess its sustainability.
What Does PIMCO High Income Fund Do?
PIMCO High Income Fund is a closed-end management investment company. The company's primary investment objective is to seek high current income. Its secondary objective is to seek capital appreciation.
A Glimpse at PIMCO High Income Fund's Dividend History
PIMCO High Income Fund has maintained a consistent dividend payment record since 2003. Dividends are currently distributed on a monthly basis. Below is a chart showing annual Dividends Per Share for tracking historical trends.
Breaking Down PIMCO High Income Fund's Dividend Yield and Growth
As of today, PIMCO High Income Fund currently has a 12-month trailing dividend yield of 11.54% and a 12-month forward dividend yield of 11.54%. This suggests an expectation of same dividend payments over the next 12 months.
Over the past three years, PIMCO High Income Fund's annual dividend growth rate was -5.50%. Based on PIMCO High Income Fund's dividend yield and five-year growth rate, the 5-year yield on cost of PIMCO High Income Fund stock as of today is approximately 11.54%.
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, PIMCO High Income Fund's dividend payout ratio is 1.71. And this may suggest that the company's dividend may not be sustainable.
PIMCO High Income Fund's profitability rank, offers an understanding of the company's earnings prowess relative to its peers. GuruFocus ranks PIMCO High 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. PIMCO High 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.
Next Steps
Considering PIMCO High Income Fund's consistent dividend distribution history, current high yield, and the recent negative dividend growth rate, investors should carefully evaluate the sustainability of future dividends. The high payout ratio and low profitability and growth ranks raise concerns about the fund's ability to maintain its dividend payments without eroding its capital base. Value investors should weigh these factors against their individual investment strategies and risk tolerance. For those seeking additional high-dividend yield opportunities, 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.
