Eaton Vance Risk-Managed Diversified Equity Income Fund (ETJ): A Deep Dive into its Dividend ...
An analysis of ETJ's dividend history, yield, and growth rates
Eaton Vance Risk-Managed Diversified Equity Income Fund (NYSE:ETJ) recently announced a dividend of $0.06 per share, payable on 2023-09-29, with the ex-dividend date set for 2023-09-21. 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 deep dive into Eaton Vance Risk-Managed Diversified Equity Income Funds dividend performance and assess its sustainability.
What Does Eaton Vance Risk-Managed Diversified Equity Income Fund Do?
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Eaton Vance Risk-Managed Diversified Equity Income Fund is a diversified, closed-end management investment company. The fund's primary investment objective is to provide current income and gains, with a secondary objective of capital appreciation. The group invests in various sectors such as financials, healthcare, consumer discretionary, consumer staples, industrials, energy, utilities, telecommunication services, and materials.
A Glimpse at Eaton Vance Risk-Managed Diversified Equity Income Fund's Dividend History
Eaton Vance Risk-Managed Diversified Equity Income Fund has maintained a consistent dividend payment record since 2007. Dividends are currently distributed on a monthly basis. Below is a chart showing annual Dividends Per Share for tracking historical trends.
Breaking Down Eaton Vance Risk-Managed Diversified Equity Income Fund's Dividend Yield and Growth
As of today, Eaton Vance Risk-Managed Diversified Equity Income Fund currently has a 12-month trailing dividend yield of 9.41% and a 12-month forward dividend yield of 8.95%. This suggests an expectation of decrease dividend payments over the next 12 months.
Over the past three years, Eaton Vance Risk-Managed Diversified Equity Income Fund's annual dividend growth rate was -1.30%. Extended to a five-year horizon, this rate increased to -1.10% per year. Based on Eaton Vance Risk-Managed Diversified Equity Income Fund's dividend yield and five-year growth rate, the 5-year yield on cost of Eaton Vance Risk-Managed Diversified Equity Income Fund stock as of today is approximately 8.90%.
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, Eaton Vance Risk-Managed Diversified Equity Income Fund's dividend payout ratio is 0.73. This may suggest that the company's dividend may not be sustainable.
Eaton Vance Risk-Managed Diversified Equity Income Fund's profitability rank, offers an understanding of the company's earnings prowess relative to its peers. GuruFocus ranks Eaton Vance Risk-Managed Diversified Equity Income Fund'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 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. Eaton Vance Risk-Managed Diversified Equity Income Fund'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 analysis of Eaton Vance Risk-Managed Diversified Equity Income Fund's dividend payments, dividend growth rate, payout ratio, profitability and growth metrics, investors should exercise caution. While the company has a history of consistent dividend payments, its low profitability and growth rankings suggest potential risks to dividend sustainability. It's crucial for investors to further examine the company's financial health and growth prospects before making investment decisions. GuruFocus Premium users can screen for high-dividend yield stocks using the High Dividend Yield Screener.
This article first appeared on GuruFocus.
