At the request of a Wealthy Retirement reader, I’ve chosen to analyze AllianzGI Convertible & Income Fund (NYSE: NCV) and assign it a dividend safety rating like what you’d find using SafetyNet Pro.

The fund pays a monthly dividend of $0.065 per share, which comes out to a 13% annual yield.

Can investors expect that double-digit dividend to continue in the months and years ahead?

Let’s take a look.

Breathing Room

For fiscal 2016 (which ended on February 29), the fund generated $73.2 million in net investment income. This is the best metric to use when determining the fund’s ability to pay its dividend. Note that a bond fund gets its “cash flow” from investment income, so that’s why we look at NII in this case.

On a per-share basis, NII was $0.83. However, this number is actually artificially low, thanks to some accounting tricks. Remove the accounting gimmicks from the equation, and NII comes in at $0.87, which gives the fund even more breathing room over the $0.78 per share annual (or $0.065 per month) dividend.

In the first quarter of the new fiscal year, it was more of the same. The fund generated $0.21 in NII while paying out $0.195 in dividends.

Will History Repeat?

I don’t like dividend cuts. Not one bit.

They are usually necessary when they happen, like in Allianz’s case last year. But I prefer stocks with a track record of dividend raises each year… or a consistent dividend payment at the very least.

Once a company has shown the willingness to cut its dividend, there is a greater chance it will cut the dividend again, compared to a company that has never lowered its dividend and has its record intact.

Prior to last year’s cut, the $0.09 monthly dividend had been stable since the fund began paying dividends in 2011.

As long as the fund can keep NII above the dividend, it should have no problem paying shareholders. But that’s a big “if.”

As we saw as recently as last year, the fund does not always generate enough income to pay the dividend.

In the near term, I wouldn’t be too worried. But in the longer term, it’s anyone’s guess as to whether this fund will be able to continue paying its dividend.

Dividend Safety Rating: C