MainStay MacKay DefinedTerm Municipal Opportunities Fund's Dividend Analysis
Assessing the Upcoming Dividend Payment and Historical Performance
MainStay MacKay DefinedTerm Municipal Opportunities Fund (NYSE:MMD) recently announced a dividend of $0.06 per share, payable on 2024-01-31, with the ex-dividend date set for 2024-01-12. 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 MainStay MacKay DefinedTerm Municipal Opportunities Fund's dividend performance and assess its sustainability.
What Does MainStay MacKay DefinedTerm Municipal Opportunities Fund Do?
This Powerful Chart Made Peter Lynch 29% A Year For 13 Years
How to calculate the intrinsic value of a stock?
MainStay MacKay DefinedTerm Municipal Opportunities Fund is a USA-based diversified closed-end management investment company. The fund's investment objective is to seek current income exempt from regular U.S. Federal income taxes as well as total return. The company may also invest in TOB (Tender Option Bonds) Floaters and TOB Residuals issued by the TOB Issuer. It evaluates its performance against Barclays Municipal Bond Index.
A Glimpse at MainStay MacKay DefinedTerm Municipal Opportunities Fund's Dividend History
MainStay MacKay DefinedTerm Municipal Opportunities Fund has maintained a consistent dividend payment record since 2012. Dividends are currently distributed on a monthly basis. Below is a chart showing annual Dividends Per Share for tracking historical trends.
Breaking Down MainStay MacKay DefinedTerm Municipal Opportunities Fund's Dividend Yield and Growth
As of today, MainStay MacKay DefinedTerm Municipal Opportunities Fund currently has a 12-month trailing dividend yield of 5.14% and a 12-month forward dividend yield of 4.78%. This suggests an expectation of decreased dividend payments over the next 12 months.
Over the past three years, MainStay MacKay DefinedTerm Municipal Opportunities Fund's annual dividend growth rate was -1.50%. Extended to a five-year horizon, this rate stayed the same. Based on MainStay MacKay DefinedTerm Municipal Opportunities Fund's dividend yield and five-year growth rate, the 5-year yield on cost of MainStay MacKay DefinedTerm Municipal Opportunities Fund stock as of today is approximately 4.77%.
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 2023-05-31, MainStay MacKay DefinedTerm Municipal Opportunities Fund's dividend payout ratio is 0.00.
MainStay MacKay DefinedTerm Municipal Opportunities Fund's profitability rank, offers an understanding of the company's earnings prowess relative to its peers. GuruFocus ranks MainStay MacKay DefinedTerm Municipal Opportunities Fund's profitability 3 out of 10 as of 2023-05-31, 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. MainStay MacKay DefinedTerm Municipal Opportunities Fund's growth rank of 3 out of 10 suggests that the company has poor growth prospects and thus, the dividend may not be sustainable.
Conclusion: Evaluating MainStay MacKay DefinedTerm Municipal Opportunities Fund's Dividend Prospects
For value investors, the dividend profile of MainStay MacKay DefinedTerm Municipal Opportunities Fund presents a mix of consistent historical payments with concerns over future growth and profitability. While the fund's commitment to monthly dividends is commendable, the negative dividend growth rate, low profitability, and growth ranks raise questions about long-term sustainability. Investors should weigh these factors carefully, along with their investment goals and risk tolerance, when considering MainStay MacKay DefinedTerm Municipal Opportunities Fund as a potential addition to their portfolios. Could this fund's tax-exempt income stream align with your financial strategy despite the risks? GuruFocus Premium users can further explore this and other high-dividend yield opportunities 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.
