Assessing the Sustainability of EVT's Upcoming Dividend Payment
EATON VANCE TAX ADVANTAGED DIVIDEND INCOME FUND (EVT, Financial) recently announced a dividend of $0.15 per share, payable on 2024-01-31, with the ex-dividend date set for 2024-01-22. 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 look into EATON VANCE TAX ADVANTAGED DIVIDEND INCOME FUND's dividend performance and assess its sustainability.
What Does EATON VANCE TAX ADVANTAGED DIVIDEND INCOME FUND Do?
EATON VANCE TAX ADVANTAGED DIVIDEND INCOME FUND is a diversified, closed-end management investment company. Its objective is to provide a high level of after-tax total return consisting mainly of tax-advantaged dividend income and capital appreciation. The fund pursues its objective by investing in dividend-paying common and preferred stocks. Its portfolio of investments consists of electric utilities, energy equipment and services, food products, health care providers and services, internet software and services, and other areas.
A Glimpse at EATON VANCE TAX ADVANTAGED DIVIDEND INCOME FUND's Dividend History
EATON VANCE TAX ADVANTAGED DIVIDEND INCOME FUND has maintained a consistent dividend payment record since 2003. 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 TAX ADVANTAGED DIVIDEND INCOME FUND's Dividend Yield and Growth
As of today, EATON VANCE TAX ADVANTAGED DIVIDEND INCOME FUND currently has a 12-month trailing dividend yield of 8.13% and a 12-month forward dividend yield of 8.13%. This suggests an expectation of the same dividend payments over the next 12 months.
Over the past three years, EATON VANCE TAX ADVANTAGED DIVIDEND INCOME FUND's annual dividend growth rate was 0.90%. Extended to a five-year horizon, this rate increased to 1.50% per year. Based on EATON VANCE TAX ADVANTAGED DIVIDEND INCOME FUND's dividend yield and five-year growth rate, the 5-year yield on cost of EATON VANCE TAX ADVANTAGED DIVIDEND INCOME FUND stock as of today is approximately 8.76%.
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 2023-10-31, EATON VANCE TAX ADVANTAGED DIVIDEND INCOME FUND's dividend payout ratio is 0.00.
EATON VANCE TAX ADVANTAGED DIVIDEND INCOME FUND's profitability rank, offers an understanding of the company's earnings prowess relative to its peers. GuruFocus ranks EATON VANCE TAX ADVANTAGED DIVIDEND INCOME FUND's profitability 2 out of 10 as of 2023-10-31, 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 TAX ADVANTAGED DIVIDEND 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.
Revenue is the lifeblood of any company, and EATON VANCE TAX ADVANTAGED DIVIDEND INCOME FUND's revenue per share, combined with the 3-year revenue growth rate, indicates a strong revenue model. EATON VANCE TAX ADVANTAGED DIVIDEND INCOME FUND's revenue has increased by approximately 34.80% per year on average, a rate that outperforms approximately 80.52% 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, EATON VANCE TAX ADVANTAGED DIVIDEND INCOME FUND's earnings increased by approximately 34.20% per year on average, a rate that outperforms approximately 77.6% of global competitors.
Concluding Insights on EVT's Dividend Outlook
In conclusion, EATON VANCE TAX ADVANTAGED DIVIDEND INCOME FUND's consistent dividend payments and modest growth rates are attractive to investors seeking income. However, the low payout ratio and profitability rank raise questions about the long-term sustainability of these dividends. While the strong revenue and earnings growth suggest potential, the company's overall growth rank indicates that there may be challenges ahead. Investors would do well to consider these factors alongside their individual investment strategy and risk tolerance. For those looking to expand their portfolio with high-dividend yield stocks, GuruFocus Premium offers a High Dividend Yield Screener for in-depth analysis and investment opportunities.
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.
