Icahn Enterprises Maintains $0.50 Quarterly Dividend, 22.5% Yield

Icahn Enterprises (IEP) declared a quarterly cash dividend of $0.50 per unit, keeping it unchanged from the prior distribution and offering a 22.5% dividend yield. The annualized payout of $2 per unit has been reduced in half since the end of 2024.

Icahn Enterprises (IEP), a diversified holding company, has maintained its quarterly cash dividend at $0.50 per unit, unchanged from its prior distribution. This move results in an annualized payout of $2 per unit, providing a 22.5% dividend yield. However, this dividend has been reduced by half since the end of 2024, a significant cut from its previous level of $2 per unit [1].

IEP's primary investment vehicle, Carl Icahn, owns approximately 86% of the company's outstanding depositary units. The company's Energy segment, which includes a 68% holding in CVR Energy (CVI), is the largest and most material, contributing 35% of total assets but a disproportionately larger 77% of net sales [1]. CVR Energy suspended its dividend on its common shares in October 2024, leading IEP to cut its distribution in half. This suspension and subsequent dividend cut have significantly impacted IEP's dividend yield.

Despite the dividend cut, IEP reported a total liquidity balance of $5.04 billion as of the end of its first quarter in 2025, with $1.32 billion in holding company cash and cash equivalents and another $865 million in subsidiary cash and cash equivalents [1]. The substantial liquidity reserves raise questions about the necessity of the dividend cut, as the company's liquidity position remains strong.

IEP's current distribution is not backstopped by intense liquidity, and the company's ad-hoc distribution cuts pose risks to current and prospective unitholders. The company's negative EPS of $0.79 during the first quarter, driven by losses at CVR, further underscores the challenges faced by IEP. CVR, despite a 28% year-to-date increase, recorded a 11.8% dip in first-quarter revenue and negative earnings, impacting IEP's overall performance [1].

The company's indicative net asset value (NAV) stood at $3 billion as of the end of the first quarter, down sequentially from $3.34 billion as of the end of December. IEP currently trades at a significant premium to NAV, with a market cap of $5.32 billion [1]. This premium, combined with the lack of consistent dividend distributions and exposure to a sector set to be hit by falling oil and gas prices, dims IEP's 22% dividend yield.

In conclusion, while IEP maintains its dividend, the significant cuts and the sector's challenging outlook pose risks to unitholders. Investors should carefully consider these factors when evaluating IEP as an investment.

References:
[1] https://seekingalpha.com/article/4788474-icahn-enterprises-the-fat-22-percent-dividend-yield-is-not-in-play