Nuveen AMT-Free Municipal Income Fund's Dividend Analysis
Assessing the Sustainability of NEA's Upcoming Dividend
Nuveen AMT-Free Municipal Income Fund (NYSE:NEA) recently announced a dividend of $0.04 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 delve into Nuveen AMT-Free Municipal Income Fund's dividend performance and assess its sustainability.
What Does Nuveen AMT-Free Municipal Income Fund Do?
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Nuveen AMT-Free Municipal Income Fund is a diversified closed-end management investment company. Its investment objective is to provide current income exempt from regular federal income tax and the alternative minimum tax applicable to individuals, by investing in an actively managed portfolio of tax-exempt municipal securities.
A Glimpse at Nuveen AMT-Free Municipal Income Fund's Dividend History
Nuveen AMT-Free Municipal Income Fund has maintained a consistent dividend payment record since 2003, with dividends currently distributed on a monthly basis. Below is a chart showing annual Dividends Per Share to track historical trends.
Breaking Down Nuveen AMT-Free Municipal Income Fund's Dividend Yield and Growth
As of today, Nuveen AMT-Free Municipal Income Fund boasts a 12-month trailing dividend yield of 3.95% and a 12-month forward dividend yield of 4.63%, indicating an expectation of increased dividend payments over the next 12 months. However, with a dividend yield near a 10-year low and underperforming 68.23% of global competitors in the Asset Management industry, the yield may not be as attractive to income investors.
Over the past three years, Nuveen AMT-Free Municipal Income Fund's annual dividend growth rate was -13.10%. This rate increased to -5.80% per year over a five-year period, and over the past decade, the annual dividends per share growth rate stands at -4.00%. The 5-year yield on cost is approximately 2.93% as of today.
The Sustainability Question: Payout Ratio and Profitability
The dividend payout ratio is a critical indicator of dividend sustainability, with Nuveen AMT-Free Municipal Income Fund's ratio at 3.64 as of 2023-10-31. This figure raises concerns about the sustainability of the dividend. Additionally, the company's profitability rank is 3 out of 10, further casting doubt on the dividend's future, despite the company reporting net profit in 8 out of the past 10 years.
Growth Metrics: The Future Outlook
For dividends to be sustainable, a company must demonstrate strong growth metrics. Nuveen AMT-Free Municipal Income Fund's growth rank is 3 out of 10, which may not bode well for future dividends. The company's revenue model, indicated by its revenue per share and 3-year revenue growth rate, has experienced a decline, underperforming 88% of global competitors. Moreover, the 3-year EPS growth rate has decreased significantly, underperforming 87.38% of global competitors.
Concluding Thoughts on Nuveen AMT-Free Municipal Income Fund's Dividend Prospects
In summary, while Nuveen AMT-Free Municipal Income Fund's upcoming dividend payment might be attractive to some investors, the underlying metrics suggest caution. The declining dividend growth rate, low profitability rank, and poor growth prospects raise questions about the long-term sustainability of the dividend. Investors should carefully consider these factors along with the company's overall financial health and market position before making investment decisions. For those seeking high-dividend yield stocks, GuruFocus Premium offers a High Dividend Yield Screener to aid in the search for more sustainable income-generating investments.
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.
