An In-Depth Look at EVV's Dividend Sustainability and Growth
Eaton Vance Ltd Duration Income Fund (EVV, Financial) recently announced a dividend of $0.08 per share, payable on 2023-12-18, with the ex-dividend date set for 2023-12-08. 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 Ltd Duration Income Fund's dividend performance and assess its sustainability.
What Does Eaton Vance Ltd Duration Income Fund Do?
Eaton Vance Ltd Duration Income Fund is a diversified closed-end management investment company. The company's investment objective is to provide a high level of current income. The Fund may, as a secondary objective, also seek capital appreciation. The Fund invests primarily in Senior Floating-Rate Loans, Debt Obligations, Equity Securities, Derivatives as well as Foreign Securities and Currencies. The Fund invests in various industries, including aerospace and defense, automotive, building and development, healthcare, leisure amongst others.
A Glimpse at Eaton Vance Ltd Duration Income Fund's Dividend History
Eaton Vance Ltd Duration Income Fund has maintained a consistent dividend payment record since 2003. 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 Ltd Duration Income Fund's Dividend Yield and Growth
As of today, Eaton Vance Ltd Duration Income Fund currently has a 12-month trailing dividend yield of 10.82% and a 12-month forward dividend yield of 9.90%. This suggests an expectation of decreased dividend payments over the next 12 months. Over the past three years, Eaton Vance Ltd Duration Income Fund's annual dividend growth rate was 2.40%. Extended to a five-year horizon, this rate increased to 5.80% per year. And over the past decade, Eaton Vance Ltd Duration Income Fund's annual dividends per share growth rate stands at -0.70%.
Based on Eaton Vance Ltd Duration Income Fund's dividend yield and five-year growth rate, the 5-year yield on cost of Eaton Vance Ltd Duration Income Fund stock as of today is approximately 14.34%.
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 2023-09-30, Eaton Vance Ltd Duration Income Fund's dividend payout ratio is 1.03, which may suggest that the company's dividend may not be sustainable.
Eaton Vance Ltd Duration Income Fund's profitability rank, offers an understanding of the company's earnings prowess relative to its peers. GuruFocus ranks Eaton Vance Ltd Duration Income Fund's profitability 3 out of 10 as of 2023-09-30, suggesting the dividend may not be sustainable. The company has reported net profit in 6 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 Ltd Duration 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. However, Eaton Vance Ltd Duration Income Fund's revenue per share, combined with the 3-year revenue growth rate, indicates a strong revenue model. Eaton Vance Ltd Duration Income Fund's revenue has increased by approximately 32.80% per year on average, a rate that outperforms approximately 80.59% of global competitors.
The company's 3-year EPS growth rate showcases its capability to grow its earnings, a critical component for sustaining dividends in the long run. During the past three years, Eaton Vance Ltd Duration Income Fund's earnings increased by approximately 29.50% per year on average, a rate that outperforms approximately 74.51% of global competitors.
Engaging Conclusion: The Dividend Perspective
In conclusion, while Eaton Vance Ltd Duration Income Fund's dividend yield is attractive, the sustainability of its dividends is a matter of concern. The payout ratio and profitability rank indicate potential challenges ahead. However, the impressive revenue and EPS growth rates provide a glimmer of hope for the future. Investors should weigh these factors carefully when considering Eaton Vance Ltd Duration Income Fund as a potential addition to their dividend portfolios. Will the Fund's strong revenue and earnings growth be enough to sustain and potentially grow its dividends? This remains a key question for value investors seeking informed financial decisions.
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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.
