BlackRock Enhanced Equity Dividend Trust's Dividend Analysis
An In-depth Look at BDJ's Dividend Performance and Sustainability
BlackRock Enhanced Equity Dividend Trust (NYSE:BDJ) recently announced a dividend of $0.06 per share, payable on 2023-10-31, with the ex-dividend date set for 2023-10-13. 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 delve into BlackRock Enhanced Equity Dividend Trust's dividend performance and assess its sustainability.
What Does BlackRock Enhanced Equity Dividend Trust Do?
This Powerful Chart Made Peter Lynch 29% A Year For 13 Years
How to calculate the intrinsic value of a stock?
BlackRock Enhanced Equity Dividend Trust is a United States closed-end management investment company. Its investment objective is to seek current income and current gains, with a secondary objective of long-term capital appreciation.
A Glimpse at BlackRock Enhanced Equity Dividend Trust's Dividend History
BlackRock Enhanced Equity Dividend Trust has maintained a consistent dividend payment record since 2005. Dividends are currently distributed on a monthly basis. Below is a chart showing annual Dividends Per Share for tracking historical trends.
Breaking Down BlackRock Enhanced Equity Dividend Trust's Dividend Yield and Growth
As of today, BlackRock Enhanced Equity Dividend Trust currently has a 12-month trailing dividend yield of 11.02% and a 12-month forward dividend yield of 8.88%. This suggests an expectation of decreased dividend payments over the next 12 months.
Over the past three years, BlackRock Enhanced Equity Dividend Trust's annual dividend growth rate was 7.10%. Extended to a five-year horizon, this rate decreased to 6.00% per year.
Based on BlackRock Enhanced Equity Dividend Trust's dividend yield and five-year growth rate, the 5-year yield on cost of BlackRock Enhanced Equity Dividend Trust stock as of today is approximately 14.75%.
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 2023-06-30, BlackRock Enhanced Equity Dividend Trust's dividend payout ratio is 0.98. This may suggest that the company's dividend may not be sustainable.
BlackRock Enhanced Equity Dividend Trust's profitability rank, offers an understanding of the company's earnings prowess relative to its peers. GuruFocus ranks BlackRock Enhanced Equity Dividend Trust's profitability 2 out of 10 as of 2023-06-30, suggesting the dividend may not be sustainable. The company has reported net profit in 3 years out of the past 10 years.
Growth Metrics: The Future Outlook
To ensure the sustainability of dividends, a company must have robust growth metrics. BlackRock Enhanced Equity Dividend Trust'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
Given the current dividend yield, growth rate, payout ratio, and growth metrics, investors need to consider whether BlackRock Enhanced Equity Dividend Trust's dividend is sustainable. It's essential to keep an eye on these metrics over time for any significant changes. Remember, a high dividend yield is only beneficial if the dividend payment is sustainable in the long run.
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.
