Exploring the Dividend Performance and Sustainability of Nuveen AMT-Free Municipal Credit Income Fund
Nuveen AMT-Free Municipal Credit Income Fund (NVG, Financial) recently announced a dividend of $0.04 per share, payable on November 1, 2023, with the ex-dividend date set for October 12, 2023. As investors anticipate this forthcoming payment, it also brings the company's dividend history, yield, and growth rates into focus. Using data from GuruFocus, we delve into Nuveen AMT-Free Municipal Credit Income Fund's dividend performance and assess its sustainability.
What Does Nuveen AMT-Free Municipal Credit Income Fund Do?
Nuveen AMT-Free Municipal Credit Income Fund is a diversified, closed-end management investment company. Its primary objective is to provide current income exempt from regular federal income tax. The Fund primarily invests in investment-grade municipal bonds that are exempt from regular federal income taxes. Its portfolio comprises sectors such as Health Care, Education and Civic Organizations, Consumer Staples, Transportation, Utilities, among others.
A Glimpse at Nuveen AMT-Free Municipal Credit Income Fund's Dividend History
The Nuveen AMT-Free Municipal Credit Income Fund has maintained a consistent dividend payment record since 2002, with dividends currently distributed on a monthly basis. The chart below shows the annual Dividends Per Share for tracking historical trends.
Breaking Down Nuveen AMT-Free Municipal Credit Income Fund's Dividend Yield and Growth
As of today, the Nuveen AMT-Free Municipal Credit Income Fund currently has a 12-month trailing dividend yield of 5.27% and a 12-month forward dividend yield of 4.95%, suggesting an expectation of decreased dividend payments over the next 12 months.
Over the past three years, the Fund's annual dividend growth rate was -1.20%. Extended to a five-year horizon, this rate increased slightly to -0.10% per year. Based on the Fund's dividend yield and five-year growth rate, the 5-year yield on cost of the Fund's stock as of today is approximately 5.24%.
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, ensuring the availability of funds for future growth and unexpected downturns. As of April 30, 2023, the Fund's dividend payout ratio is 0.00.
The Fund's profitability rank, offering an understanding of the company's earnings prowess relative to its peers, is 3 out of 10 as of April 30, 2023, suggesting that 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. The 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 the Nuveen AMT-Free Municipal Credit Income Fund has a consistent dividend payment record, its negative dividend growth rate, low profitability rank, and poor growth prospects raise questions about the sustainability of its dividends. Investors must consider these factors before deciding to invest in the Fund for its dividends. 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.
