Gabelli Equity Trust 10% Distribution Policy Reaffirmed and Declared Third Quarter Distribution of $0.15 Per Share

Rhea-AI Summary

The Gabelli Equity Trust Inc. (NYSE:GAB) has reaffirmed its 10% distribution policy and declared a $0.15 per share cash distribution for the third quarter, payable on September 23, 2024. The distribution is based on the average net asset value of the Fund over the last four calendar quarters. The Board of Directors reviews potential distributions quarterly, considering income, realized capital gains, and available capital.

For 2024 distributions, approximately 4% comes from net investment income, 20% from net capital gains, and 76% is considered a return of capital. The Fund's distribution policy aims to satisfy minimum distribution requirements for regulated investment companies. Shareholders should note that the distribution rate doesn't reflect the Fund's dividend yield or total return, and the policy may be modified by the Board at any time.

Positive

• Consistent 10% distribution policy maintained
• $0.15 per share cash distribution declared for Q3 2024
• 20% of distributions come from net capital gains

Negative

• 76% of distributions deemed return of capital, potentially reducing shareholder cost basis
• Only 4% of distributions from net investment income
• Distribution policy subject to modification, no guarantee of continuity

Insights

Financial Analyst

The reaffirmation of Gabelli Equity Trust's 10% distribution policy and the declaration of a $0.15 per share cash distribution is a neutral event for investors. While it provides a consistent income stream, it's important to note that only 4% comes from net investment income. The 76% deemed as return of capital could be concerning, as it suggests the Fund may not be generating sufficient earnings to cover distributions. This could potentially erode the Fund's asset base over time if not offset by capital appreciation. Investors should be cautious and not confuse the distribution rate with the Fund's actual performance or yield.

Tax Expert

The tax implications of this distribution are complex and potentially favorable for investors. With only 4% from net investment income and 20% from net capital gains, a significant portion may be treated as long-term capital gain or qualified dividend income. This could result in a lower tax burden for shareholders compared to ordinary income. However, the 76% return of capital, while not immediately taxable, will reduce the cost basis of shares. This could lead to higher capital gains taxes when shares are eventually sold. Investors should consult with their tax advisors to understand the specific impact on their individual situations.

RYE, N.Y., Aug. 23, 2024 (GLOBE NEWSWIRE) -- The Board of Directors of The Gabelli Equity Trust Inc. (NYSE:GAB) (the “Fund”) reaffirmed and satisfied its 10% distribution policy by declaring a $0.15 per share cash distribution payable on September 23, 2024 to common stock shareholders of record on September 16, 2024.

The Fund intends to pay a minimum annual distribution of 10% of the average net asset value of the Fund within a calendar year or an amount sufficient to satisfy the minimum distribution requirements of the Internal Revenue Code for regulated investment companies. The average net asset value of the Fund is based on the average net asset values as of the last day of the four preceding calendar quarters during the year. The net asset value per share fluctuates daily.

Each quarter, the Board of Directors reviews the amount of any potential distribution from the income, realized capital gain, or capital available. The Board of Directors will continue to monitor the Fund’s distribution level, taking into consideration the Fund’s net asset value and the current financial market environment. The Fund’s distribution policy is subject to modification by the Board of Directors at any time, and there can be no guarantee that the policy will continue. The distribution rate should not be considered the dividend yield or total return on an investment in the Fund.

All or part of the distribution may be treated as long-term capital gain or qualified dividend income (or a combination of both) for individuals, each subject to the maximum federal income tax rate for long term capital gains, which is currently 20% in taxable accounts for individuals (or less depending on an individual’s tax bracket). In addition, certain U.S. shareholders who are individuals, estates or trusts and whose income exceeds certain thresholds will be required to pay a 3.8% Medicare surcharge on their "net investment income", which includes dividends received from the Fund and capital gains from the sale or other disposition of shares of the Fund.

If the Fund does not generate sufficient earnings (dividends and interest income, less expenses, and realized net capital gain) equal to or in excess of the aggregate distributions paid by the Fund in a given year, then the amount distributed in excess of the Fund’s earnings would be deemed a return of capital. Since this would be considered a return of a portion of a shareholder’s original investment, it is generally not taxable and would be treated as a reduction in the shareholder’s cost basis.

Long-term capital gains, qualified dividend income, investment company taxable income, and return of capital, if any, will be allocated on a pro-rata basis to all distributions to common shareholders for the year. Based on the accounting records of the Fund currently available, each of the distributions paid to common shareholders in 2024 would include approximately 4% from net investment income, 20% from net capital gains and 76% would be deemed a return of capital on a book basis. This does not represent information for tax reporting purposes. The estimated components of each distribution are updated and provided to shareholders of record in a notice accompanying the distribution and are available on our website (www.gabelli.com). The final determination of the sources of all distributions in 2024 will be made after year end and can vary from the quarterly estimates. Shareholders should not draw any conclusions about the Fund’s investment performance from the amount of the current distribution. All individual shareholders with taxable accounts will receive written notification regarding the components and tax treatment for all 2024 distributions in early 2025 via Form 1099-DIV.

Investors should carefully consider the investment objectives, risks, charges, and expenses of the Fund before investing. For more information regarding the Fund’s distribution policy and other information about the Fund, call:

Molly Marion
(914) 921-5681

About The Gabelli Equity Trust
The Gabelli Equity Trust Inc. is a diversified, closed-end management investment company with $2.0 billion in total net assets whose primary investment objective is long-term growth of capital. The Fund is managed by Gabelli Funds, LLC, a subsidiary of GAMCO Investors, Inc. (OTCQX: GAMI).

NYSE – GAB
CUSIP – 362397101

THE GABELLI EQUITY TRUST INC.
Investor Relations Contact:
Molly Marion
(914) 921-5681
mmarion@gabelli.com

FAQ

What is the Q3 2024 distribution amount for Gabelli Equity Trust (GAB)?

The Gabelli Equity Trust (NYSE:GAB) has declared a $0.15 per share cash distribution for the third quarter of 2024, payable on September 23, 2024.

When is the record date for GAB's Q3 2024 distribution?

The record date for Gabelli Equity Trust's (GAB) third quarter 2024 distribution is September 16, 2024.

What percentage of GAB's 2024 distributions is considered return of capital?

Based on current accounting records, approximately 76% of Gabelli Equity Trust's (GAB) distributions in 2024 would be deemed a return of capital on a book basis.

How often does GAB's Board review the distribution amount?

The Board of Directors of Gabelli Equity Trust (GAB) reviews the amount of any potential distribution quarterly, considering income, realized capital gains, and available capital.