I just looked at PSEC and it has a payout ratio of 114%
I know nothing about it though.
SDRL I used to own. The guy that runs it runs (ran?) FRO (frontline) which went from $30 to $2 (now back to $4).
Fredrickson or something like that. A smart guy though.
So, what should I fear when a payout ratio is 114%?
It means they are paying 114% of their earnings out as the dividend. So they are paying out more money than they are making.
Which means they are drawing on their cash reserves, or picking up debt. Or both. In the long haul it's (obviously) unsustainable.
As I suggested to the OP do research on the company. To say the company cant maintain it is false if you dont do the research and consider the work that they have done over the last 5 years. Yes they cant maintain it if they dont get in the black but there is more to consider than that. which is why they haven't cut the dividend thus far. Even if they cut the dividend in half be over 6% not to mention if you read the P&Ls over the last 5 years and listen to the conference calls as I stated the company so far has been doing everything right. Thats not to say there isnt risk and that could change so protect yourself if need be BUT if I am going to have a high Yielder this is one of them, as its payout has been rewarding and has a great management team and diversified portfolio. But also if the OP only is buying this stock that is never a good idea as well.
Barry John F who is Chief Executive Officer at Prospect Capital Corporation bought 100,000 shares at $10.86 on March 21, 2014. Following this transaction, the Chief Executive Officer owned 3.8 million shares meaning that the stake was reduced by 2.71% with the 100,000-share transaction.
Currently there are 6 analysts that rate Prospect Capital Corporation a buy, no analysts rate it a sell, and 4 rate it a hold
Not to mention today they had a record quarter and while the price might be suppressed for awhile I will take the juicy dividend.
http://seekingalpha.com/article/2121463-a-record-quarter-for-prospect-capital Again these are my opinions and as stated the stock fits my criteria but in no way is a recommendation and IMHO opinion if this is the only stock you have you should be more diversified anyhow with consideration of some high yielders.
To answer your other question I am long SDRL, NE and ESV