First Trust Energy Infrastructure Fund's Dividend Analysis
Assessing the Sustainability of FIF's Dividend Payments
First Trust Energy Infrastructure Fund (NYSE:FIF) recently announced a dividend of $0.10 per share, payable on January 16, 2024, with the ex-dividend date set for January 2, 2024. 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 First Trust Energy Infrastructure Fund's dividend performance and assess its sustainability.
What Does First Trust Energy Infrastructure Fund Do?
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First Trust Energy Infrastructure Fund is a closed-end management investment company. The fund's investment objective is to seek a high level of total return with an emphasis on current distributions paid to shareholders. It seeks to invest in stocks of companies operating in the energy infrastructure sector, including pipeline companies, utilities, and other companies that derive a majority of their revenues from operating or providing services in support of infrastructure assets such as pipelines, power transmission, and petroleum and natural gas storage in the petroleum, natural gas, and power generation industries. Geographically, all the operations function through the United States of America.
A Glimpse at First Trust Energy Infrastructure Fund's Dividend History
First Trust Energy Infrastructure Fund has maintained a consistent dividend payment record since 2011. Dividends are currently distributed on a monthly basis. Below is a chart showing annual Dividends Per Share for tracking historical trends.
Breaking Down First Trust Energy Infrastructure Fund's Dividend Yield and Growth
As of today, First Trust Energy Infrastructure Fund currently has a 12-month trailing dividend yield of 6.65% and a 12-month forward dividend yield of 7.29%. This suggests an expectation of an increase in dividend payments over the next 12 months.
Over the past three years, First Trust Energy Infrastructure Fund's annual dividend growth rate was -17.10%. Extended to a five-year horizon, this rate increased to -12.90% per year. Based on First Trust Energy Infrastructure Fund's dividend yield and five-year growth rate, the 5-year yield on cost of First Trust Energy Infrastructure Fund stock as of today is approximately 3.34%.
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 May 31, 2023, First Trust Energy Infrastructure Fund's dividend payout ratio is 0.00.