Understanding Eaton Vance Floating-rate Income Trust's Dividend Sustainability
An In-depth Analysis of EFT's Dividend Performance and Future Prospects
Eaton Vance Floating-rate Income Trust (NYSE:EFT) recently announced a dividend of $0.12 per share, payable on 2023-09-29, with the ex-dividend date set for 2023-09-21. 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 deep dive into Eaton Vance Floating-rate Income Trust's dividend performance and assess its sustainability.
What Does Eaton Vance Floating-rate Income Trust Do?
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Eaton Vance Floating-rate Income Trust is a closed-end management investment company. The company's objective is to provide a high level of current income and its secondary objective is capital appreciation.
A Glimpse at Eaton Vance Floating-rate Income Trust's Dividend History
Eaton Vance Floating-rate Income Trust has maintained a consistent dividend payment record since 2004. Dividends are currently distributed on a monthly basis. Below is a chart showing annual Dividends Per Share for tracking historical trends.
Breaking Down Eaton Vance Floating-rate Income Trust's Dividend Yield and Growth
As of today, Eaton Vance Floating-rate Income Trust currently has a 12-month trailing dividend yield of 9.32% and a 12-month forward dividend yield of 11.22%. This suggests an expectation of increased dividend payments over the next 12 months.
Over the past three years, Eaton Vance Floating-rate Income Trust's annual dividend growth rate was 4.30%. Extended to a five-year horizon, this rate decreased to 3.70% per year.
Based on Eaton Vance Floating-rate Income Trust's dividend yield and five-year growth rate, the 5-year yield on cost of Eaton Vance Floating-rate Income Trust stock as of today is approximately 11.18%.
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, Eaton Vance Floating-rate Income Trust's dividend payout ratio is 2.05. This may suggest that the company's dividend may not be sustainable.
Eaton Vance Floating-rate Income Trust's profitability rank, offers an understanding of the company's earnings prowess relative to its peers. GuruFocus ranks Eaton Vance Floating-rate Income Trust'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. Eaton Vance Floating-rate Income Trust's growth rank of 3 out of 10 suggests that the company has poor growth prospects and thus, the dividend may not be sustainable.
Next Steps
Considering Eaton Vance Floating-rate Income Trust's dividend payments, dividend growth rate, payout ratio, profitability, and growth metrics, the sustainability of its dividends appears questionable. Investors should carefully evaluate these factors before making an investment decision. GuruFocus Premium users can screen for high-dividend yield stocks using the High Dividend Yield Screener.
This article first appeared on GuruFocus.
