Assessing the Sustainability of Eaton Vance Enhanced Equity Income Fund II's Dividends
Eaton Vance Enhanced Equity Income Fund II (EOS, Financial) recently announced a dividend of $0.12 per share, payable on 2024-01-31, with the ex-dividend date set for 2024-01-22. 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 Eaton Vance Enhanced Equity Income Fund II's dividend performance and assess its sustainability.
What Does Eaton Vance Enhanced Equity Income Fund II Do?
Eaton Vance Enhanced Equity Income Fund II is a diversified, closed-end management investment company. The fund's primary investment objective is to provide current income, with a secondary objective of capital appreciation. It invests in a portfolio of large and mid-cap securities in sectors such as Information Technology, Consumer Discretionary, Communication Services, Healthcare, Industrials, Consumer Staples, Financials, Materials, and Energy.
A Glimpse at Eaton Vance Enhanced Equity Income Fund II's Dividend History
Eaton Vance Enhanced Equity Income Fund II has maintained a consistent dividend payment record since 2005. Dividends are currently distributed on a monthly basis. Below is a chart showing annual Dividends Per Share for tracking historical trends.
Breaking Down Eaton Vance Enhanced Equity Income Fund II's Dividend Yield and Growth
As of today, Eaton Vance Enhanced Equity Income Fund II currently has a 12-month trailing dividend yield of 7.17% and a 12-month forward dividend yield of 7.17%. This suggests an expectation of the same dividend payments over the next 12 months. Over the past three years, Eaton Vance Enhanced Equity Income Fund II's annual dividend growth rate was 7.70%. Extended to a five-year horizon, this rate increased to 8.20% per year. Based on Eaton Vance Enhanced Equity Income Fund II's dividend yield and five-year growth rate, the 5-year yield on cost of Eaton Vance Enhanced Equity Income Fund II stock as of today is approximately 10.63%.
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 2023-06-30, Eaton Vance Enhanced Equity Income Fund II's dividend payout ratio is 0.42.
Eaton Vance Enhanced Equity Income Fund II's profitability rank, offers an understanding of the company's earnings prowess relative to its peers. GuruFocus ranks Eaton Vance Enhanced Equity Income Fund II's profitability 2 out of 10 as of 2023-06-30, suggesting the dividend may not be sustainable. The company has reported net profit in 5 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. Eaton Vance Enhanced Equity Income Fund II'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 Eaton Vance Enhanced Equity Income Fund II boasts a strong history of dividend payments with an attractive yield and growth rate, the underlying financial metrics such as the payout ratio, profitability rank, and growth rank indicate potential concerns regarding the sustainability of these dividends. Investors considering this stock for its dividend income should closely monitor these factors to make an informed decision. For those seeking additional high-dividend yield opportunities, GuruFocus Premium users can utilize 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.
