First Trust MLP and Energy Income Fund's Dividend Analysis
A Comprehensive Look at FEI's Dividend Profile
First Trust MLP and Energy Income Fund (NYSE:FEI) recently announced a dividend of $0.05 per share, payable on 2024-01-16, with the ex-dividend date set for 2024-01-02. 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 look into First Trust MLP and Energy Income Fund's dividend performance and assess its sustainability.
What Does First Trust MLP and Energy Income Fund Do?
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First Trust MLP and Energy Income Fund is a non-diversified, closed-end management investment company. Its focus is on investing in publicly traded master limited partnerships (MLP) related entities, and other companies in the energy sector and energy utility industries. Its investment objective is to seek a high level of total return with an emphasis on current distributions paid to common shareholders.
A Glimpse at First Trust MLP and Energy Income Fund's Dividend History
First Trust MLP and Energy Income Fund has maintained a consistent dividend payment record since 2013. Dividends are currently distributed on a monthly basis. Below is a chart showing annual Dividends Per Share for tracking historical trends.
Breaking Down First Trust MLP and Energy Income Fund's Dividend Yield and Growth
As of today, First Trust MLP and Energy Income Fund currently has a 12-month trailing dividend yield of 7.00% and a 12-month forward dividend yield of 7.00%. This suggests an expectation of same dividend payments over the next 12 months. Over the past three years, First Trust MLP and Energy Income Fund's annual dividend growth rate was -20.60%. Extended to a five-year horizon, this rate increased to -17.50% per year. Based on First Trust MLP and Energy Income Fund's dividend yield and five-year growth rate, the 5-year yield on cost of First Trust MLP and Energy Income Fund stock as of today is approximately 2.66%.
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 2023-04-30, First Trust MLP and Energy Income Fund's dividend payout ratio is 1.03, which may suggest that the company's dividend may not be sustainable. First Trust MLP and Energy Income Fund's profitability rank, offers an understanding of the company's earnings prowess relative to its peers. GuruFocus ranks First Trust MLP and Energy Income Fund's profitability 2 out of 10 as of 2023-04-30, 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. First Trust MLP and Energy 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. Revenue is the lifeblood of any company, and First Trust MLP and Energy Income Fund's revenue per share, combined with the 3-year revenue growth rate, indicates a strong revenue model. First Trust MLP and Energy Income Fund's revenue has increased by approximately 18.40% per year on average, a rate that outperforms approximately 68.33% 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 MLP and Energy Income Fund's earnings increased by approximately 25.70% per year on average, a rate that outperforms approximately 70.82% of global competitors.
Engaging Conclusion: Dividend Outlook and Investment Considerations
In conclusion, while First Trust MLP and Energy Income Fund offers an attractive dividend yield, the sustainability of its dividend payments is a concern given the negative dividend growth rate, high payout ratio, and low profitability rank. However, the strong revenue and earnings growth rates provide a glimmer of hope for the company's future financial health. Investors should weigh the risks and growth prospects carefully when considering First Trust MLP and Energy Income Fund as a potential income-generating investment. Will the Fund's growth metrics be enough to support its dividend in the long term? For those seeking high-dividend yield opportunities, GuruFocus Premium users can explore options 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.
