Oxford Lane Capital Corp's Dividend Analysis
Assessing the Sustainability of Oxford Lane Capital Corp's Dividend Payments
Oxford Lane Capital Corp (NASDAQ:OXLC) recently announced a dividend of $0.08 per share, payable on 2024-02-29, with the ex-dividend date set for 2024-02-14. 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 Oxford Lane Capital Corp's dividend performance and assess its sustainability.
What Does Oxford Lane Capital Corp Do?
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Oxford Lane Capital Corp is a non-diversified closed-end management investment company. The fund's investment objective is to maximize its portfolio's risk-adjusted total return over its investment horizon. Its current focus is to seek that return by investing in equity and junior tranches of CLO (collateralized loan obligation) vehicles, which are collateralized primarily by a diverse portfolio of senior loans, and which generally have little to no exposure to real estate loans, mortgage loans or pools of consumer-based debt, such as credit card receivables or auto loans. Its investment strategy also includes investing in warehouse facilities, which are financing structures intended to aggregate senior loans that may be used to form the basis of a CLO vehicle.
A Glimpse at Oxford Lane Capital Corp's Dividend History
Oxford Lane Capital Corp has maintained a consistent dividend payment record since 2014. Dividends are currently distributed on a monthly basis. Below is a chart showing annual Dividends Per Share for tracking historical trends.
Breaking Down Oxford Lane Capital Corp's Dividend Yield and Growth
As of today, Oxford Lane Capital Corp currently has a 12-month trailing dividend yield of 18.29% and a 12-month forward dividend yield of 18.57%. This suggests an expectation of increased dividend payments over the next 12 months.
Over the past three years, Oxford Lane Capital Corp's annual dividend growth rate was -17.80%. Extended to a five-year horizon, this rate increased to -15.30% per year. Based on Oxford Lane Capital Corp's dividend yield and five-year growth rate, the 5-year yield on cost of Oxford Lane Capital Corp stock as of today is approximately 7.97%.
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 2023-09-30, Oxford Lane Capital Corp's dividend payout ratio is 1.39, which may suggest that the company's dividend may not be sustainable.