Nuveen Taxable Municipal Income Fund's Dividend Analysis
Assessing the Sustainability of NBB's Dividend Profile
Nuveen Taxable Municipal Income Fund (NYSE:NBB) recently announced a dividend of $0.48 per share, payable on 2023-12-29, with the ex-dividend date set for 2023-12-26. 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 Taxable Municipal Income Fund's dividend performance and assess its sustainability.
What Does Nuveen Taxable Municipal Income Fund Do?
This Powerful Chart Made Peter Lynch 29% A Year For 13 Years
How to calculate the intrinsic value of a stock?
Nuveen Taxable Municipal Income Fund is a closed-end fund incorporated in the United States. Its primary objective is current income through investments in taxable municipal securities; the secondary objective is to seek enhanced portfolio value and total return. The fund invests primarily in a diversified portfolio of taxable municipal securities.
A Glimpse at Nuveen Taxable Municipal Income Fund's Dividend History
Nuveen Taxable Municipal Income Fund has maintained a consistent dividend payment record since 2010. Dividends are currently distributed on a monthly basis. Below is a chart showing annual Dividends Per Share for tracking historical trends.
Breaking Down Nuveen Taxable Municipal Income Fund's Dividend Yield and Growth
As of today, Nuveen Taxable Municipal Income Fund currently has a 12-month trailing dividend yield of 5.22% and a 12-month forward dividend yield of 5.52%. This suggests an expectation of increased dividend payments over the next 12 months. Over the past three years, Nuveen Taxable Municipal Income Fund's annual dividend growth rate was -2.80%. Extended to a five-year horizon, this rate increased to -2.40% per year. Based on Nuveen Taxable Municipal Income Fund's dividend yield and five-year growth rate, the 5-year yield on cost of Nuveen Taxable Municipal Income Fund stock as of today is approximately 4.62%.
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 2023-09-30, Nuveen Taxable Municipal Income Fund's dividend payout ratio is 1.55, which may suggest that the company's dividend may not be sustainable.
Nuveen Taxable Municipal Income Fund's profitability rank, offers an understanding of the company's earnings prowess relative to its peers. GuruFocus ranks Nuveen Taxable Municipal Income Fund's profitability 2 out of 10 as of 2023-09-30, suggesting the dividend may not be sustainable. The company has reported net profit in 3 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 Taxable Municipal 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. Nuveen Taxable Municipal Income Fund's revenue per share, combined with the 3-year revenue growth rate, indicates a strong revenue model. Nuveen Taxable Municipal Income Fund's revenue has decreased by approximately -90.30% per year on average, a rate that underperforms approximately 98.2% 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 Taxable Municipal Income Fund's earnings decreased by approximately -87.60% per year on average, a rate that underperforms approximately 95.98% of global competitors.
Next Steps
In conclusion, while Nuveen Taxable Municipal Income Fund offers a notable dividend yield, the fund's negative dividend growth rate, high payout ratio, low profitability, and underperforming growth metrics raise concerns about the sustainability of its dividends. Value investors should carefully consider these factors in their investment decisions. The question remains: Can Nuveen Taxable Municipal Income Fund navigate through these challenges to maintain its current dividend payments, or will investors need to brace for potential adjustments? 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.
