An In-depth Analysis of First Trust Inter Dur Pref& Income Fund's Dividend History, Yield, Growth, and Sustainability
First Trust Inter Dur Pref& Income Fund (FPF, Financial) recently announced a dividend of $0.11 per share, payable on 2023-10-16, with the ex-dividend date set for 2023-10-02. As investors anticipate this upcoming payment, the company's dividend history, yield, and growth rates come under scrutiny. Using data from GuruFocus, let's delve into First Trust Inter Dur Pref& Income Fund's dividend performance and assess its sustainability.
What Does First Trust Inter Dur Pref& Income Fund Do?
First Trust Inter Dur Pref& Income Fund is a diversified, closed-end management investment company. Its primary investment objective is to seek a high level of current income. It also aims for capital appreciation. The Fund invests in various types of securities issued by U.S. and non-U.S. companies, spanning industries such as Banks, Insurance, Capital Markets, Electric Utilities, Oil, Gas & Consumable Fuels, Food Products, and others.
A Glimpse at First Trust Inter Dur Pref& Income Fund's Dividend History
First Trust Inter Dur Pref& Income Fund has maintained a consistent dividend payment record since 2016, currently distributing dividends on a monthly basis. The chart below shows annual Dividends Per Share for tracking historical trends.
Breaking Down First Trust Inter Dur Pref& Income Fund's Dividend Yield and Growth
As of today, First Trust Inter Dur Pref& Income Fund currently has a 12-month trailing dividend yield of 8.83% and a 12-month forward dividend yield of 8.66%. This suggests an expectation of decreased dividend payments over the next 12 months.
Over the past three years, First Trust Inter Dur Pref& Income Fund's annual dividend growth rate was -4.20%. However, when extended to a five-year horizon, this rate increased to 15.60% per year. As a result, the 5-year yield on cost of First Trust Inter Dur Pref& Income Fund stock as of today is approximately 18.31%.
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 2023-04-30, First Trust Inter Dur Pref& Income Fund's dividend payout ratio is 0.00.
First Trust Inter Dur Pref& Income Fund's profitability rank, offers an understanding of the company's earnings prowess relative to its peers. GuruFocus ranks First Trust Inter Dur Pref& Income 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 3 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. First Trust Inter Dur Pref& 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.
Next Steps
In conclusion, while First Trust Inter Dur Pref& Income Fund's dividend payments and growth rate are impressive, its payout ratio, profitability, and growth metrics raise concerns about the sustainability of its dividends. Investors should consider these factors when evaluating the potential return on their investment. GuruFocus Premium users can screen for high-dividend yield stocks using the High Dividend Yield Screener.
