A Comprehensive Look at the Fund's Dividend Performance and Prospects
Nuveen AMT-Free Municipal Income Fund (NEA, Financial) recently announced a dividend of $0.04 per share, payable on 2023-11-01, with the ex-dividend date set for 2023-10-12. 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 delve into Nuveen AMT-Free Municipal Income Fund's dividend performance and assess its sustainability.
What Does Nuveen AMT-Free Municipal Income Fund Do?
Nuveen AMT-Free Municipal Income Fund is a diversified closed-end management investment company. Its investment objective is to provide current income exempt from regular federal income tax by investing in a portfolio of municipal obligations issued by state and local government authorities or certain U.S. territories.
A Glimpse at Nuveen AMT-Free Municipal Income Fund's Dividend History
Since 2003, Nuveen AMT-Free Municipal Income Fund has maintained a consistent dividend payment record. Dividends are currently distributed on a monthly basis. Below is a chart showing annual Dividends Per Share for tracking historical trends.
Breaking Down Nuveen AMT-Free Municipal Income Fund's Dividend Yield and Growth
As of today, Nuveen AMT-Free Municipal Income Fund currently has a 12-month trailing dividend yield of 4.64% and a 12-month forward dividend yield of 4.34%. This suggests an expectation of decreased dividend payments over the next 12 months.
Over the past three years, Nuveen AMT-Free Municipal Income Fund's annual dividend growth rate was -0.20%. Extended to a five-year horizon, this rate decreased to -1.40% per year. And over the past decade, Nuveen AMT-Free Municipal Income Fund's annual dividends per share growth rate stands at -2.50%.
Based on Nuveen AMT-Free Municipal Income Fund's dividend yield and five-year growth rate, the 5-year yield on cost of Nuveen AMT-Free Municipal Income Fund stock as of today is approximately 4.32%.
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, Nuveen AMT-Free Municipal Income Fund's dividend payout ratio is 0.00.
Nuveen AMT-Free Municipal Income Fund's profitability rank, offers an understanding of the company's earnings prowess relative to its peers. GuruFocus ranks Nuveen AMT-Free Municipal Income Fund's profitability 3 out of 10 as of 2023-04-30, suggesting the dividend may not be sustainable. The company has reported net profit in 7 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. Nuveen AMT-Free Municipal Income Fund's growth rank of 3 out of 10 suggests that the company has poor growth prospects and thus, the dividend may not be sustainable.
Conclusion
While Nuveen AMT-Free Municipal Income Fund's consistent dividend payment history is commendable, its negative growth rates, low profitability rank, and poor growth prospects raise concerns about the sustainability of its dividends. Investors should consider these factors carefully before making investment decisions. GuruFocus Premium users can screen for high-dividend yield stocks using the High Dividend Yield Screener.
This article, generated by GuruFocus, is designed to provide general insights and is not tailored financial advice. Our commentary is rooted in historical data and analyst projections, utilizing an impartial methodology, and is not intended to serve as specific investment guidance. It does not formulate a recommendation to purchase or divest any stock and does not consider individual investment objectives or financial circumstances. Our objective is to deliver long-term, fundamental data-driven analysis. Be aware that our analysis might not incorporate the most recent, price-sensitive company announcements or qualitative information. GuruFocus holds no position in the stocks mentioned herein.
