Some believe this is foreshadowing a potential dividend cut in 2023 for
PDI. It's cost of money has risen so much that something has got to
My thoughts exactly - interest rate rises from 1% to 5% have to catch up to them at some point, forcing a div cut - cost of leverage has skyrocketed in two yrs.
With a current yield of 13%, it probably won't be a
crushing cut. PDI will still pay something healthy. But it may prove
prudent to wait for that moment - and to let long-term rates top out
once and for all - before one is to consider re-adding PDI . The current scheduled rates path evaluation could be projecting a March /April Top.
I'm not going to even look at getting back into PDI until the Fed stops raising rates - but haven't they said they're going up another 1% in 2023? It would be quite a shock to the market if they raised 1% more by April - house sales and mortgage originations would come to a total halt.
I looked at the last 3 months of PDI's numbers in Excel and they're not pretty, trend is awful - not sure I've ever seen a rolling coverage ratio as low as 40% - that's really ugly and certainly not sustainable:
Year to Date Net Investment Income (NII)(1)
| 3 Month Rolling Coverage Ratio(3)
||6 Month Rolling
to Date Distribution Coverage
||<==special 65 cent div paid on Dec 22 - was 6 cents of the
Dec regular paid from UNII?