Understanding the Dividend Dynamics of Invesco Mortgage Capital Inc
Invesco Mortgage Capital Inc (IVR, Financial) recently announced a dividend of $0.09 per share, payable on 2024-04-26, with the ex-dividend date set for 2024-04-05. 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 Invesco Mortgage Capital Inc's dividend performance and assess its sustainability.
What Does Invesco Mortgage Capital Inc Do?
Invesco Mortgage Capital Inc is a real estate investment trust (REIT) that focuses on financing and managing residential and commercial mortgage-backed securities and mortgage loans. The company's investment portfolio is diverse, including residential mortgage-backed securities (RMBS) backed by U.S. government agencies, commercial mortgage-backed securities (CMBS), non-agency RMBS, and other real estate-related financing arrangements. This diversification is key to the company's strategy, aiming to provide stable returns to investors.
A Glimpse at Invesco Mortgage Capital Inc's Dividend History
Invesco Mortgage Capital Inc has a history of consistent dividend payments that dates back to 2009. The company has been distributing dividends quarterly, which is a common payout frequency for REITs. Investors often look at dividend history as an indicator of a company's financial health and its commitment to returning value to shareholders. Below is a chart showing annual Dividends Per Share to track historical trends.
Breaking Down Invesco Mortgage Capital Inc's Dividend Yield and Growth
As of today, Invesco Mortgage Capital Inc currently has a 12-month trailing dividend yield of 17.02% and a 12-month forward dividend yield of 17.02%. This suggests an expectation of consistent dividend payments over the next 12 months. However, over the past three years, Invesco Mortgage Capital Inc's annual dividend growth rate was -34.50%, which decreased to -38.20% per year over a five-year horizon. Over the past decade, the annual dividends per share growth rate stands at -21.30%. These negative growth rates raise questions about the future trajectory of the company's dividends.
Based on Invesco Mortgage Capital Inc's dividend yield and five-year growth rate, the 5-year yield on cost of Invesco Mortgage Capital Inc stock as of today is approximately 1.53%.
The Sustainability Question: Payout Ratio and Profitability
When assessing the sustainability of dividends, the dividend payout ratio is a crucial metric. It indicates the proportion of earnings distributed as dividends. Invesco Mortgage Capital Inc's dividend payout ratio as of 2023-12-31 is 0.00, which may be a result of the company not having sufficient earnings to cover its dividend payments, thus raising concerns about the sustainability of its dividends.
Additionally, Invesco Mortgage Capital Inc's profitability rank of 2 out of 10 suggests that the company's earnings are relatively weak compared to its peers, further casting doubt on the long-term sustainability of its dividends. The company has reported net profit in 4 out of the past 10 years, which is not a strong track record.
Growth Metrics: The Future Outlook
The future sustainability of dividends is also tied to a company's growth prospects. Invesco Mortgage Capital Inc's growth rank of 2 out of 10 indicates poor growth prospects, which could imply that dividends may not be sustainable in the long run. However, the company's 3-year EPS growth rate has been impressive, with earnings increasing by approximately 79.60% per year on average, outperforming about 90.7% of global competitors. This growth in earnings, if sustained, could support future dividend payments.
Engaging Conclusion: A Balanced Perspective on Invesco Mortgage Capital Inc's Dividends
While Invesco Mortgage Capital Inc's high dividend yield may be attractive, the negative growth rates in dividends per share and concerns over the payout ratio and profitability rank highlight the importance of a cautious approach. Investors should consider both the risks and potential rewards associated with the company's dividend payments. The impressive 3-year EPS growth rate offers a glimmer of hope for the sustainability of dividends, but it's crucial to monitor the company's future earnings and financial health closely. For those seeking high-dividend yield stocks, GuruFocus Premium users can utilize the High Dividend Yield Screener for further research and informed investment decisions.
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.
