First Trust New Opportunities MLP & Energy Fund's Dividend Analysis
Assessing the Sustainability of First Trust New Opportunities MLP & Energy Fund's Dividend
First Trust New Opportunities MLP & Energy Fund (NYSE:FPL) recently announced a dividend of $0.04 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 New Opportunities MLP & Energy Fund's dividend performance and assess its sustainability.
What Does First Trust New Opportunities MLP & Energy Fund Do?
This Powerful Chart Made Peter Lynch 29% A Year For 13 Years
How to calculate the intrinsic value of a stock?
First Trust New Opportunities MLP & Energy Fund is a non-diversified, closed-end management investment company. Its investment objective is to seek a high level of total return with an emphasis on current distributions paid to common shareholders. The fund invests in various industries, including pipelines, electric power, natural gas utility, coal, and others.
A Glimpse at First Trust New Opportunities MLP & Energy Fund's Dividend History
First Trust New Opportunities MLP & Energy Fund has maintained a consistent dividend payment record since 2014. 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 New Opportunities MLP & Energy Fund's Dividend Yield and Growth
As of today, First Trust New Opportunities MLP & Energy Fund currently has a 12-month trailing dividend yield of 6.54% and a 12-month forward dividend yield of 6.54%. This suggests an expectation of same dividend payments over the next 12 months.
Over the past three years, First Trust New Opportunities MLP & Energy Fund's annual dividend growth rate was -20.60%. Extended to a five-year horizon, this rate decreased to -21.20% per year. Based on First Trust New Opportunities MLP & Energy Fund's dividend yield and five-year growth rate, the 5-year yield on cost of First Trust New Opportunities MLP & Energy Fund stock as of today is approximately 1.99%.
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 New Opportunities MLP & Energy Fund's dividend payout ratio is 0.92. And this may suggest that the company's dividend may not be sustainable.
First Trust New Opportunities MLP & Energy Fund's profitability rank, offers an understanding of the company's earnings prowess relative to its peers. GuruFocus ranks First Trust New Opportunities MLP & Energy 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 New Opportunities MLP & Energy 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 New Opportunities MLP & Energy Fund's revenue per share, combined with the 3-year revenue growth rate, indicates a strong revenue model. First Trust New Opportunities MLP & Energy Fund's revenue has increased by approximately 6.90% per year on average, a rate that outperforms approximately 51.56% 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 New Opportunities MLP & Energy Fund's earnings increased by approximately 7.10% per year on average, a rate that outperforms approximately 47.58% of global competitors.
Investor Considerations for First Trust New Opportunities MLP & Energy Fund's Dividend
Considering First Trust New Opportunities MLP & Energy Fund's dividend payments, growth rate, payout ratio, profitability, and growth metrics, investors should weigh these factors carefully. The fund's high dividend yield may be attractive, but the declining growth rate and low profitability and growth ranks could raise concerns about the long-term sustainability of its dividends. It's essential for investors to consider whether the fund's investment strategy aligns with their own risk tolerance and income requirements. 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.
