Unpacking the Dividend History, Yield, and Growth of FFA
First Trust Enhanced Equity Income Fund (FFA, Financial) recently announced a dividend of $0.32 per share, payable on 2023-09-29, with the ex-dividend date set for 2023-09-22. 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 First Trust Enhanced Equity Income Fund's dividend performance and assess its sustainability.
Understanding First Trust Enhanced Equity Income Fund
First Trust Enhanced Equity Income Fund is a diversified, closed-end management investment company. Its investment objective is to provide a high level of current income and gains and, to a lesser extent, capital appreciation. The Fund pursues its investment objective by investing in a diversified portfolio of equity securities.
First Trust Enhanced Equity Income Fund's Dividend History
First Trust Enhanced Equity Income Fund has maintained a consistent dividend payment record since 2005. Dividends are currently distributed on a quarterly basis. Below is a chart showing annual Dividends Per Share for tracking historical trends.
Dividend Yield and Growth of First Trust Enhanced Equity Income Fund
As of today, First Trust Enhanced Equity Income Fund currently has a 12-month trailing dividend yield of 7.20% and a 12-month forward dividend yield of 7.20%. This suggests an expectation of same dividend payments over the next 12 months.
Over the past three years, First Trust Enhanced Equity Income Fund's annual dividend growth rate was 3.40%. Extended to a five-year horizon, this rate decreased to 2.80% per year. Based on First Trust Enhanced Equity Income Fund's dividend yield and five-year growth rate, the 5-year yield on cost of First Trust Enhanced Equity Income Fund stock as of today is approximately 8.27%.
Is First Trust Enhanced Equity Income Fund's Dividend Sustainable?
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 2023-06-30, First Trust Enhanced Equity Income Fund's dividend payout ratio is 0.48.
First Trust Enhanced Equity Income Fund's profitability rank, offers an understanding of the company's earnings prowess relative to its peers. GuruFocus ranks First Trust Enhanced Equity Income Fund's profitability 2 out of 10 as of 2023-06-30, suggesting the dividend may not be sustainable. The company has reported net profit in 4 years out of past 10 years.
First Trust Enhanced Equity Income Fund's Growth Metrics
To ensure the sustainability of dividends, a company must have robust growth metrics. First Trust Enhanced Equity 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.
Conclusion
While First Trust Enhanced Equity Income Fund boasts a commendable dividend history and yield, its growth and profitability metrics raise concerns about the sustainability of its dividend. It is crucial for investors to consider these factors before making investment decisions. GuruFocus Premium users can screen for high-dividend yield stocks using the High Dividend Yield Screener.
