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FIRST TRUST HIGH YIELD OPPORTUNITIES 2027 TERM FUND's Dividend Analysis

GuruFocus Research
·3-min read

Insight into FTHY's Dividend Performance and Sustainability

FIRST TRUST HIGH YIELD OPPORTUNITIES 2027 TERM FUND (NYSE:FTHY) recently announced a dividend of $0.13 per share, payable on 2024-01-25, 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 HIGH YIELD OPPORTUNITIES 2027 TERM FUND's dividend performance and assess its sustainability.

What Does FIRST TRUST HIGH YIELD OPPORTUNITIES 2027 TERM FUND Do?

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FIRST TRUST HIGH YIELD OPPORTUNITIES 2027 TERM FUND is a diversified, closed-end management investment company. The investment objective of the fund is to provide current income.

FIRST TRUST HIGH YIELD OPPORTUNITIES 2027 TERM FUND's Dividend Analysis
FIRST TRUST HIGH YIELD OPPORTUNITIES 2027 TERM FUND's Dividend Analysis

A Glimpse at FIRST TRUST HIGH YIELD OPPORTUNITIES 2027 TERM FUND's Dividend History

FIRST TRUST HIGH YIELD OPPORTUNITIES 2027 TERM FUND has maintained a consistent dividend payment record since 2021. Dividends are currently distributed on a monthly basis. Below is a chart showing annual Dividends Per Share for tracking historical trends.

Breaking Down FIRST TRUST HIGH YIELD OPPORTUNITIES 2027 TERM FUND's Dividend Yield and Growth

As of today, FIRST TRUST HIGH YIELD OPPORTUNITIES 2027 TERM FUND currently has a 12-month trailing dividend yield of 11.13% and a 12-month forward dividend yield of 11.20%. This suggests an expectation of increased dividend payments over the next 12 months.

Based on FIRST TRUST HIGH YIELD OPPORTUNITIES 2027 TERM FUND's dividend yield and five-year growth rate, the 5-year yield on cost of FIRST TRUST HIGH YIELD OPPORTUNITIES 2027 TERM FUND stock as of today is approximately 11.11%.

FIRST TRUST HIGH YIELD OPPORTUNITIES 2027 TERM FUND's Dividend Analysis
FIRST TRUST HIGH YIELD OPPORTUNITIES 2027 TERM FUND's Dividend Analysis

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 HIGH YIELD OPPORTUNITIES 2027 TERM FUND's dividend payout ratio is 0.00.

FIRST TRUST HIGH YIELD OPPORTUNITIES 2027 TERM FUND's profitability rank, offers an understanding of the company's earnings prowess relative to its peers. GuruFocus ranks FIRST TRUST HIGH YIELD OPPORTUNITIES 2027 TERM FUND's profitability 2 out of 10 as of 2023-05-31, suggesting the dividend may not be sustainable. The company has reported net profit in 1 year 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 HIGH YIELD OPPORTUNITIES 2027 TERM FUND'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

Investors should consider FIRST TRUST HIGH YIELD OPPORTUNITIES 2027 TERM FUND's dividend payments in the context of its dividend growth rate, payout ratio, profitability, and growth metrics. While the fund's high dividend yield might be attractive, the low profitability and growth ranks indicate potential risks to the dividend's sustainability. It is crucial for investors to weigh these factors and monitor any changes in the company's financial health and market conditions that could impact future dividend payments. For those seeking to diversify their portfolio with high-dividend-yielding stocks, GuruFocus Premium users can explore options 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.

This article first appeared on GuruFocus.