First Trust Energy Infrastructure Fund (FIF): A Deep Dive into Its Dividend Performance and ...
Exploring the Dividend History, Yield, Growth, and Future Prospects of First Trust Energy Infrastructure Fund (NYSE:FIF)
First Trust Energy Infrastructure Fund (NYSE:FIF) recently announced a dividend of $0.1 per share, payable on October 16, 2023, with the ex-dividend date set for October 2, 2023. As investors anticipate this upcoming payment, it's essential to examine the company's dividend history, yield, and growth rates. Using GuruFocus data, we delve into First Trust Energy Infrastructure Fund's dividend performance and assess its sustainability.
What Does First Trust Energy Infrastructure Fund Do?
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First Trust Energy Infrastructure Fund is a closed-end management investment company. The fund's objective is to seek a high level of total return with an emphasis on current distributions paid to shareholders. It invests in stocks of companies operating in the energy infrastructure sector, including pipeline companies, utilities, and other companies that derive a significant portion of their revenues from operating or providing services in support of infrastructure assets. Geographically, all operations are conducted through the United States of America.
A Glimpse at First Trust Energy Infrastructure Fund's Dividend History
First Trust Energy Infrastructure Fund has maintained a consistent dividend payment record since 2011, with dividends currently distributed on a monthly basis. The chart below presents annual Dividends Per Share for tracking historical trends.
Breaking Down First Trust Energy Infrastructure Fund's Dividend Yield and Growth
As of today, First Trust Energy Infrastructure Fund has a 12-month trailing dividend yield of 6.51% and a 12-month forward dividend yield of 7.93%, suggesting an anticipated increase in dividend payments over the next 12 months.
Over the past three years, First Trust Energy Infrastructure Fund's annual dividend growth rate was -17.10%. This rate increased to -12.90% per year when extended to a five-year horizon. Based on these figures, the 5-year yield on cost of First Trust Energy Infrastructure Fund stock as of today is approximately 3.27%.
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 May 31, 2023, First Trust Energy Infrastructure Fund's dividend payout ratio is 0.00.
First Trust Energy Infrastructure Fund's profitability rank, offers an understanding of the company's earnings prowess relative to its peers. GuruFocus ranks First Trust Energy Infrastructure Fund's profitability 2 out of 10 as of May 31, 2023, suggesting the dividend may not be sustainable. The company has reported net profit in 4 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. First Trust Energy Infrastructure 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.
Revenue is the lifeblood of any company, and First Trust Energy Infrastructure Fund's revenue per share, combined with the 3-year revenue growth rate, indicates a strong revenue model. First Trust Energy Infrastructure Fund's revenue has increased by approximately 40.90% per year on average, a rate that outperforms approximately 85.1% of global competitors.
The company's 3-year EPS growth rate showcases its capability to grow its earnings, a critical component for sustaining dividends in the long run. During the past three years, First Trust Energy Infrastructure Fund's earnings increased by approximately 41.70% per year on average, a rate that outperforms approximately 81.99% of global competitors.
Conclusion
While First Trust Energy Infrastructure Fund has a strong dividend yield and a consistent dividend payment record, the company's low profitability and growth ranks, along with a negative dividend growth rate, raise questions about the sustainability of its dividends. Investors should carefully consider these factors 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.
