Icahn Enterprises (NASDAQ: IEP) delivered its first-quarter results before the opening bell Wednesday, narrowing its net losses year over year and keeping its mouth-watering dividend at its previous level. Investors reacted positively to the news, sending shares of the holding company up by as much as 5% in morning trading. As of 12:06 p.m., they had retreated slightly, but were still up by 4.1%.

Better results, stable dividend

Icahn Enterprises is the investment vehicle of legendary activist investor Carl Icahn, but the company itself has been a target of activists in recent years. In 2023, Hindenburg Research published a report calling Icahn Enterprises “substantially overvalued” and claiming it used a “Ponzi-like” structure to fund its dividend.

The report resonated with investors, who punished the stock. It remains down by about 67% from where it traded in early 2023, and Icahn Enterprises earlier this year named portfolio manager Andrew Teno as its new CEO. But it continues to conduct business as usual despite the scrutiny.

Icahn Enterprises posted a first-quarter net loss of $38 million, which was an improvement of $232 million year over year. First-quarter adjusted EBITDA came in at $134 million, up from $95 million a year earlier. The improvements were driven by lower losses in the company’s investment portfolio and automotive segments, which were partially offset by a slowdown at its energy unit.

Just as important, Icahn Enterprises declared a $1 per share quarterly dividend, in line with its previous payout. The company slashed the dividend by 50% last year, but has held it steady in the quarters since.

Is Icahn Enterprises stock a buy?

The company holds an odd assortment of energy, automotive, food, real estate, and pharma assets, and even absent the activist scrutiny, it would be unlikely to appeal to many investors. But at the stock’s current price, its dividend yields 22%, implying that either the stock is underpriced or the payout is unsustainable.

We know Hindenburg Research’s answer to that question. We’ve also heard Icahn Enterprises’ insistence that the activist is off base. Investors who are tempted to buy in and capitalize on that dividend should keep a close eye on Icahn Enterprises, and not invest too much in it.

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Lou Whiteman has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.