Understanding TEI's Dividend Performance and Sustainability
Templeton Emerging Markets Income Fund (TEI, Financial) recently announced a dividend of $0.05 per share, payable on 2023-09-29, with the ex-dividend date set for 2023-09-15. 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 Templeton Emerging Markets Income Fund's dividend performance and assess its sustainability.
What Does Templeton Emerging Markets Income Fund Do?
Templeton Emerging Markets Income Fund is a closed-end fund. It seeks high, current income, with a secondary goal of capital appreciation, by investing, under normal market conditions. The company's investment portfolio includes Foreign Government and Agency Securities; Quasi-Sovereign and Corporate Bonds; Common Stocks and Other Equity Interests, and Short-Term Investments and Money Market Funds.
A Glimpse at Templeton Emerging Markets Income Fund's Dividend History
Templeton Emerging Markets Income Fund has maintained a consistent dividend payment record since 1993. Dividends are currently distributed on a monthly basis. Below is a chart showing annual Dividends Per Share for tracking historical trends.
Breaking Down Templeton Emerging Markets Income Fund's Dividend Yield and Growth
As of today, Templeton Emerging Markets Income Fund currently has a 12-month trailing dividend yield of 11.32% and a 12-month forward dividend yield of 11.45%. This suggests an expectation of increased dividend payments over the next 12 months. Over the past three years, Templeton Emerging Markets Income Fund's annual dividend growth rate was -6.60%. Extended to a five-year horizon, this rate increased to -2.40% per year. Based on Templeton Emerging Markets Income Fund's dividend yield and five-year growth rate, the 5-year yield on cost of Templeton Emerging Markets Income Fund stock as of today is approximately 10.03%.
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 2023-06-30, Templeton Emerging Markets Income Fund's dividend payout ratio is 1.27. And this may suggest that the company's dividend may not be sustainable.
Templeton Emerging Markets Income Fund's profitability rank, offers an understanding of the company's earnings prowess relative to its peers. GuruFocus ranks Templeton Emerging Markets Income Fund's profitability 1 out of 10 as of 2023-06-30, suggesting the dividend may not be sustainable. The company has reported net profit in 1 year out of the past 10 years.
Growth Metrics: The Future Outlook
To ensure the sustainability of dividends, a company must have robust growth metrics. Templeton Emerging Markets Income Fund's growth rank of 1 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 Templeton Emerging Markets Income Fund's revenue per share, combined with the 3-year revenue growth rate, indicates a strong revenue model. Templeton Emerging Markets Income Fund's revenue has increased by approximately -84.60% per year on average, a rate that underperforms than approximately 96.31% 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, Templeton Emerging Markets Income Fund's earnings increased by approximately -82.70% per year on average, a rate that underperforms than approximately 94.46% of global competitors.
Conclusion
Based on the above analysis, Templeton Emerging Markets Income Fund's dividend payments, dividend growth rate, payout ratio, profitability, and growth metrics present a mixed picture. While the company has a consistent dividend payment record and a high dividend yield, the negative dividend growth rate, high payout ratio, low profitability rank, and poor growth metrics raise concerns about the sustainability of its dividends. Therefore, investors need to exercise caution and conduct a thorough analysis before considering this stock for its dividends.
GuruFocus Premium users can screen for high-dividend yield stocks using the High Dividend Yield Screener.
