Yahoo Finance First Trust Senior Floating Rate Income Fund II's Dividend Analysis
Assessing the Sustainability of FCT's Dividend Profile
First Trust Senior Floating Rate Income Fund II (NYSE:FCT) recently announced a dividend of $0.1 per share, payable on 2024-01-16, with the ex-dividend date set for 2024-01-02. 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 Senior Floating Rate Income Fund II's dividend performance and assess its sustainability.
What Does First Trust Senior Floating Rate Income Fund II Do?
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First Trust Senior Floating Rate Income Fund II is a United States-based diversified, closed-end management investment company. Its primary investment objective is to seek a high level of current income. As a secondary objective, the fund attempts to preserve capital. The fund seeks to achieve these objectives by investing primarily in a portfolio of senior floating-rate loan interests. Its portfolio includes investments across various sectors such as aerospace and defense, agricultural products, broadcasting, cable and satellite, and electric utilities.
A Glimpse at First Trust Senior Floating Rate Income Fund II's Dividend History
First Trust Senior Floating Rate Income Fund II has maintained a consistent dividend payment record since 2004, currently distributing dividends on a monthly basis. Below is a chart showing annual Dividends Per Share for tracking historical trends.
Breaking Down First Trust Senior Floating Rate Income Fund II's Dividend Yield and Growth
As of today, First Trust Senior Floating Rate Income Fund II currently has a 12-month trailing dividend yield of 10.62% and a 12-month forward dividend yield of 11.54%. This suggests an expectation of increased dividend payments over the next 12 months. Over the past three years, the fund's annual dividend growth rate was -2.30%. However, extending to a five-year horizon, this rate increased to 5.70% per year. Based on the dividend yield and five-year growth rate, the 5-year yield on cost of First Trust Senior Floating Rate Income Fund II stock as of today is approximately 14.03%.
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 2023-05-31, First Trust Senior Floating Rate Income Fund II's dividend payout ratio is 1.66, which may suggest that the company's dividend may not be sustainable. The fund's profitability rank, as of the same date, is 3 out of 10, indicating challenges in earnings relative to its peers and raising concerns about the sustainability of its dividends. The company has reported net profit in 4 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. First Trust Senior Floating Rate Income Fund II's growth rank of 3 out of 10 suggests that the company has poor growth prospects, which may impact the sustainability of its dividends in the long term.
Next Steps
Considering First Trust Senior Floating Rate Income Fund II's dividend payments, dividend growth rate, payout ratio, profitability, and growth metrics, investors should closely monitor these factors when evaluating the fund's dividend sustainability. While the high yield may be attractive, the underlying financial health and growth prospects of the fund are crucial for long-term dividend reliability. For those seeking to explore other high-dividend yield opportunities, GuruFocus Premium users can utilize the High Dividend Yield Screener to find stocks with promising dividend profiles.
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.
This article first appeared on GuruFocus.
