First Trust Enhanced Equity Income Fund Dividend Analysis

Insights into FFA dividend sustainability and performance

First Trust Enhanced Equity Income Fund (NYSE:FFA) recently announced a dividend of $0.32 per share, payable on March 28, 2024, with an ex-dividend date of March 22, 2024 . The company’s dividend history, yield, and growth rate are also in focus as investors look forward to future payouts. Let’s examine First Trust Enhanced Equity Income Fund’s dividend performance and evaluate its sustainability using data from GuruFocus.

What does First Trust Enhanced Equity Income Fund do?

First Trust Enhanced Equity Income Fund is a diversified, closed-end managed investment company. Its investment objective is to produce high levels of current income and profits and, to a lesser extent, capital appreciation. The Fund pursues its investment objective by investing in a diversified portfolio of securities.

A glimpse into First Trust Enhanced Equity Income Fund’s dividend history

First Trust Enhanced Equity Income Fund has maintained a consistent dividend payment record since 2005. Dividends are currently distributed on a quarterly basis. Below is a graph showing annual dividends per share to track historical trends.

Breaking First Trust improves dividend yield and growth for equity income funds

As of today, First Trust Enhanced Equity Income Fund has a 12-month forward dividend yield of 6.57% and a 12-month forward dividend yield of 6.57%. This suggests that the same dividend payments are expected over the next 12 months.

Over the past three years, First Trust Enhanced Equity Income Fund’s annual dividend growth rate was 3.40%. When extended to a five-year period, this rate decreased to 2.60% per year. Based on First Trust Enhanced Equity Income Fund’s dividend yield and five-year growth rate, First Trust Enhanced Equity Income Fund shares have a five-year cost yield of approximately 7.47% as of today. is.

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Questions about sustainability: Dividend payout ratio and profitability

To assess dividend sustainability, you need to evaluate a company’s payout ratio. Dividend payout ratio helps determine the proportion of a company’s profits that it distributes as dividends. A low ratio indicates that the company is retaining a significant portion of its earnings, thereby ensuring that it has funds for future growth or unexpected economic downturns. As of December 31, 2023, First Trust Enhanced Equity Income Fund’s dividend payout ratio is 0.38.

First Trust Enhanced Equity Income Fund’s Profitability Rank helps you understand the company’s earning power compared to its peers. GuruFocus ranks First Trust Enhanced Equity Income Fund’s profitability at 3 out of 10 as of December 31, 2023, indicating that the dividend may not be sustainable. Suggests. The company has posted a net profit in five of the past 10 years.

Growth indicators: future outlook

To ensure dividend sustainability, companies must have solid growth metrics. First Trust Enhanced Equity Income Fund’s growth rank of 3 out of 10 suggests that the company’s growth prospects are poor and the dividend may not be sustainable.

Earnings are the lifeblood of any company, and the First Trust Enhanced Equity Income Fund’s earnings per share combined with its three-year earnings growth rate presents a strong earnings model. First Trust Enhanced Equity Income Fund’s returns have grown on average at around 9.60% per year, which is higher than around 53.46% of its global competitors.

The company’s three-year EPS growth rate indicates its ability to grow earnings, which is a key factor in maintaining a dividend over the long term. Over the past three years, First Trust Enhanced Equity Income Fund’s returns have increased by an average of approximately 9.70% per year. This is approximately 51.83% higher than its global competitors.

Considering the dividend future of First Trust Enhanced Equity Income Fund

Given First Trust Enhanced Equity Income Fund’s consistent dividend payments, dividend growth rate, payout ratio, profitability, and growth metrics, investors should weigh these factors to determine the long-term sustainability of the dividend. there is. While the dividend payout ratio and profitability rank show warning signs, sales and profit growth rates point to a more promising outlook. This is a balancing act and requires careful consideration of both the risks and opportunities ahead. For those seeking high-dividend yield investments, GuruFocus Premium users can explore their options using the High Dividend Yield Screener.

This article created by GuruFocus is intended to provide general insight and is not intended as financial advice. Our commentary is based on historical data and analyst forecasts using an unbiased methodology and is not intended to serve as specific investment guidance. It does not constitute a recommendation to buy or sell stocks, and does not take into account your individual investment objectives or financial situation. Our objective is to provide fundamental data-driven analysis over time. Please note that our analysis may not incorporate the latest announcements or qualitative information from price-sensitive companies. GuruFocus has no position in the stocks mentioned herein.

This article first appeared on GuruFocus.