Yahoo Finance Invesco Trust for Investment Grade Municipals's Dividend Analysis
Assessing the Sustainability of Invesco Trust for Investment Grade Municipals's Upcoming Dividend
Invesco Trust for Investment Grade Municipals (NYSE:VGM) recently announced a dividend of $0.03 per share, payable on 2024-01-31, with the ex-dividend date set for 2024-01-16. 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 Trust for Investment Grade Municipals's dividend performance and assess its sustainability.
What Does Invesco Trust for Investment Grade Municipals Do?
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Invesco Trust for Investment Grade Municipals is active in the financial services sector. Its investment objective is to provide common shareholders with a high level of current income exempt from federal income tax, consistent with preservation of capital.
A Glimpse at Invesco Trust for Investment Grade Municipals's Dividend History
Invesco Trust for Investment Grade Municipals has maintained a consistent dividend payment record since 1992. Dividends are currently distributed on a monthly basis. Below is a chart showing annual Dividends Per Share for tracking historical trends.
Breaking Down Invesco Trust for Investment Grade Municipals's Dividend Yield and Growth
As of today, Invesco Trust for Investment Grade Municipals currently has a 12-month trailing dividend yield of 4.47% and a 12-month forward dividend yield of 4.20%. This suggests an expectation of decrease dividend payments over the next 12 months.
Invesco Trust for Investment Grade Municipals's dividend yield of 4.47% is near a 10-year low and underperforms than 62.1% of global competitors in the Asset Management industry, suggesting that the company's dividend yield may not be a compelling proposition for income investors.
Over the past three years, Invesco Trust for Investment Grade Municipals's annual dividend growth rate was -4.60%. Extended to a five-year horizon, this rate decreased to -5.00% per year. Based on Invesco Trust for Investment Grade Municipals's dividend yield and five-year growth rate, the 5-year yield on cost of Invesco Trust for Investment Grade Municipals stock as of today is approximately 3.46%.
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 2023-08-31, Invesco Trust for Investment Grade Municipals's dividend payout ratio is 46.25, which may suggest that the company's dividend may not be sustainable.
Invesco Trust for Investment Grade Municipals's profitability rank, offers an understanding of the company's earnings prowess relative to its peers. GuruFocus ranks Invesco Trust for Investment Grade Municipals's profitability 2 out of 10 as of 2023-08-31, suggesting the dividend may not be sustainable. The company has reported net profit in 4 years out of past 10 years.
Growth Metrics: The Future Outlook
To ensure the sustainability of dividends, a company must have robust growth metrics. Invesco Trust for Investment Grade Municipals'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 Invesco Trust for Investment Grade Municipals's consistent dividend history against the backdrop of a declining dividend growth rate, payout ratio, and weak profitability and growth metrics, investors should exercise caution. While the upcoming dividend payment might seem attractive, the underlying financial health and growth prospects of Invesco Trust for Investment Grade Municipals appear to indicate potential challenges in maintaining its dividend payments in the long term. Investors are encouraged to conduct thorough due diligence and consider the company's ability to sustain its dividend payments amidst these factors. For those seeking income-generating investments, exploring other opportunities with stronger growth and profitability profiles might be prudent. 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.
This article first appeared on GuruFocus.
