Nuveen AMT-Free Municipal Credit Income Fund's Dividend Analysis
Delving into NVG's Dividend Sustainability and Growth Prospects
Nuveen AMT-Free Municipal Credit Income Fund (NYSE:NVG) recently announced a dividend of $0.05 per share, payable on 2024-02-01, with the ex-dividend date set for 2024-01-11. 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 Nuveen AMT-Free Municipal Credit Income Fund's dividend performance and assess its sustainability.
What Does Nuveen AMT-Free Municipal Credit Income Fund Do?
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Nuveen AMT-Free Municipal Credit Income Fund is a diversified, closed-end management investment company. Its objective is to provide current income exempt from regular federal income tax. The Fund invests predominantly in investment grade municipal bonds that are exempt from regular federal income taxes.
A Glimpse at Nuveen AMT-Free Municipal Credit Income Fund's Dividend History
Nuveen AMT-Free Municipal Credit Income Fund has maintained a consistent dividend payment record since 2002. Dividends are currently distributed on a monthly basis. Below is a chart showing annual Dividends Per Share for tracking historical trends.
Breaking Down Nuveen AMT-Free Municipal Credit Income Fund's Dividend Yield and Growth
As of today, Nuveen AMT-Free Municipal Credit Income Fund currently has a 12-month trailing dividend yield of 4.40% and a 12-month forward dividend yield of 5.05%. This suggests an expectation of increased dividend payments over the next 12 months.
Nuveen AMT-Free Municipal Credit Income Fund's dividend yield of 4.40% is near a 10-year low and underperforms 62.62% of global competitors in the Asset Management industry, suggesting that the company's dividend yield may not be a compelling proposition for income investors.
Over the past three years, Nuveen AMT-Free Municipal Credit Income Fund's annual dividend growth rate was -12.50%. Extended to a five-year horizon, this rate increased to -5.20% per year. And over the past decade, Nuveen AMT-Free Municipal Credit Income Fund's annual dividends per share growth rate stands at -1.00%.
Based on Nuveen AMT-Free Municipal Credit Income Fund's dividend yield and five-year growth rate, the 5-year yield on cost of Nuveen AMT-Free Municipal Credit Income Fund stock as of today is approximately 3.37%.
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 2023-10-31, Nuveen AMT-Free Municipal Credit Income Fund's dividend payout ratio is 4.08, and this may suggest that the company's dividend may not be sustainable.
Nuveen AMT-Free Municipal Credit Income Fund's profitability rank, offers an understanding of the company's earnings prowess relative to its peers. GuruFocus ranks Nuveen AMT-Free Municipal Credit Income Fund's profitability 3 out of 10 as of 2023-10-31, suggesting the dividend may not be sustainable. The company has reported net profit in 8 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. Nuveen AMT-Free Municipal Credit Income 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.
Revenue is the lifeblood of any company, and Nuveen AMT-Free Municipal Credit Income Fund's revenue per share, combined with the 3-year revenue growth rate, indicates a strong revenue model. Nuveen AMT-Free Municipal Credit Income Fund's revenue has increased by approximately -26.00% per year on average, a rate that underperforms approximately 82.49% 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, Nuveen AMT-Free Municipal Credit Income Fund's earnings increased by approximately -31.90% per year on average, a rate that underperforms approximately 83.61% of global competitors.
Next Steps
In conclusion, while Nuveen AMT-Free Municipal Credit Income Fund has a history of consistent dividend payments, its current yield is near a 10-year low and its growth metrics raise concerns about the sustainability of future dividends. The negative dividend growth rate, low profitability rank, and underwhelming growth prospects suggest that investors should exercise caution. It's important to monitor the Fund's forthcoming financial reports and market conditions for any signs of improvement that could bolster dividend sustainability. For those seeking high-dividend yield opportunities, GuruFocus Premium users can utilize the High Dividend Yield Screener to discover potentially more robust income-generating stocks.
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.
