Assessing the dividend history, yield, growth rates, payout ratio, and growth metrics of Franklin Universal Trust
Franklin Universal Trust (FT, Financial) has recently announced a dividend of $0.04 per share, payable on 2023-09-29, with the ex-dividend date set for 2023-09-15. As investors eagerly anticipate this upcoming payment, it's essential to examine the company's dividend history, yield, and growth rates. Using data from GuruFocus, we will delve into Franklin Universal Trust's dividend performance and assess its sustainability.
Understanding Franklin Universal Trust
Franklin Universal Trust is a closed-end management investment company. Its primary investment objective is to provide high, current income consistent with capital preservation. Its secondary objective is income growth through dividend increases and capital appreciation. The fund mainly invests in two asset classes, high yield bonds, and utility stocks.
Franklin Universal Trust's Dividend History
Franklin Universal Trust has maintained a consistent dividend payment record since 1993, with dividends currently distributed on a monthly basis. The chart below shows the annual Dividends Per Share for tracking historical trends.
Dividend Yield and Growth of Franklin Universal Trust
As of today, Franklin Universal Trust has a 12-month trailing dividend yield of 8.49% and a 12-month forward dividend yield of 7.58%, suggesting an expectation of decreased dividend payments over the next 12 months. Over the past three years, the company's annual dividend growth rate was 16.30%, decreasing to 6.60% per year when extended to a five-year horizon. Based on these figures, the 5-year yield on cost of Franklin Universal Trust stock as of today is approximately 11.69%.
Assessing Dividend Sustainability: Payout Ratio and Profitability
To evaluate the sustainability of the dividend, it's crucial to consider the company's payout ratio. The dividend payout ratio indicates the portion of earnings the company distributes as dividends. A lower ratio suggests that the company retains a significant part of its earnings, ensuring the availability of funds for future growth and unexpected downturns. As of 2023-02-28, Franklin Universal Trust's dividend payout ratio is 0.00. The company's profitability rank is 2 out of 10 as of 2023-02-28, suggesting the dividend may not be sustainable, considering the company has reported net profit in 4 years out of the past 10 years.
Future Outlook: Growth Metrics
A company must have robust growth metrics to ensure the sustainability of dividends. Franklin Universal Trust'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 Franklin Universal Trust has a consistent dividend payment record, its current dividend yield, growth rate, payout ratio, profitability, and growth metrics suggest a potential risk to dividend sustainability. Investors should consider these factors when making investment decisions. GuruFocus Premium users can screen for high-dividend yield stocks using the High Dividend Yield Screener.
