Unraveling FPL's dividend history, sustainability, and growth prospects
First Trust New Opportunities MLP & Energy Fund (FPL, Financial) recently announced a dividend of $0.04 per share, payable on 2023-10-16, with the ex-dividend date set for 2023-10-02. 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 New Opportunities MLP & Energy Funds dividend performance and assess its sustainability.
Understanding First Trust New Opportunities MLP & Energy Fund
First Trust New Opportunities MLP & Energy Fund is a non-diversified, closed-end management investment company. Its investment objective is to seek a high level of total return with an emphasis on current distributions paid to common shareholders. The fund invests in various industries, including pipelines, electric power, natural gas utility, coal, and others.
Tracing First Trust New Opportunities MLP & Energy Fund's Dividend History
First Trust New Opportunities MLP & Energy Fund has maintained a consistent dividend payment record since 2014. Dividends are currently distributed on a monthly basis. Below is a chart showing annual Dividends Per Share for tracking historical trends.
Decoding First Trust New Opportunities MLP & Energy Fund's Dividend Yield and Growth
As of today, First Trust New Opportunities MLP & Energy Fund currently has a 12-month trailing dividend yield of 7.19% and a 12-month forward dividend yield of 7.19%. This suggests an expectation of same dividend payments over the next 12 months.
Over the past three years, First Trust New Opportunities MLP & Energy Fund's annual dividend growth rate was -20.60%. Extended to a five-year horizon, this rate decreased to -21.20% per year. Based on First Trust New Opportunities MLP & Energy Fund's dividend yield and five-year growth rate, the 5-year yield on cost of First Trust New Opportunities MLP & Energy Fund stock as of today is approximately 2.18%.
Is FPL's Dividend Sustainable? Assessing 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 2023-04-30, First Trust New Opportunities MLP & Energy Fund's dividend payout ratio is 0.92. This may suggest that the company's dividend may not be sustainable.
First Trust New Opportunities MLP & Energy Fund's profitability rank, offers an understanding of the company's earnings prowess relative to its peers. GuruFocus ranks First Trust New Opportunities MLP & Energy Fund's profitability 2 out of 10 as of 2023-04-30, suggesting the dividend may not be sustainable. The company has reported net profit in 4 years out of past 10 years.
Future Dividend Prospects: Evaluating FPL's Growth Metrics
To ensure the sustainability of dividends, a company must have robust growth metrics. First Trust New Opportunities MLP & Energy 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.
Revenue is the lifeblood of any company, and First Trust New Opportunities MLP & Energy Fund's revenue per share, combined with the 3-year revenue growth rate, indicates a strong revenue model. First Trust New Opportunities MLP & Energy Fund's revenue has increased by approximately 6.90% per year on average, a rate that outperforms approximately 53.95% 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, First Trust New Opportunities MLP & Energy Fund's earnings increased by approximately 7.10% per year on average, a rate that outperforms approximately 50.88% of global competitors.
Conclusion
While First Trust New Opportunities MLP & Energy Fund has demonstrated a consistent dividend payment history, its high payout ratio and low profitability rank raise questions about the sustainability of its dividends. Furthermore, the company's poor growth rank adds to these concerns. However, its robust revenue growth and EPS growth rate offer some positive signals. Investors should carefully consider these factors before making investment decisions.
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