Gabelli Convertible and Income Securities Fund Declares Distribution of $0.12 Per Share

Rhea-AI Summary

The Gabelli Convertible and Income Securities Fund (NYSE:GCV) has declared a $0.12 per share cash distribution, payable on June 23, 2025, to shareholders of record on June 13, 2025. The Fund maintains a policy to distribute a minimum of 8% of its average net asset value annually. The current distribution composition includes approximately 13% from net investment income and 87% return of capital based on accounting records for the fiscal year ending September 30, 2025. The Board regularly reviews distribution levels considering market conditions and net asset value fluctuations. Final tax determinations for 2025 distributions will be provided to shareholders via Form 1099-DIV in early 2026.

Shareholders should note that the distribution may be subject to a maximum 20% federal income tax rate for long-term capital gains in taxable accounts, plus a 3.8% Medicare surcharge for certain individuals whose income exceeds specific thresholds.

Positive

• Commitment to maintain 8% minimum annual distribution of average NAV
• Regular quarterly distribution provides steady income stream for investors
• Board actively monitors and adjusts distribution levels based on market conditions

Negative

• 87% of distribution classified as return of capital, indicating insufficient earnings to cover distributions
• Fund's net asset value fluctuates daily, affecting distribution stability
• Additional 3.8% Medicare surcharge may apply to certain investors

Insights

Investment Fund Analyst

Gabelli Fund declares a $0.12 quarterly distribution with 87% classified as return of capital rather than true earnings-generated income.

The $0.12 per share cash distribution announcement from Gabelli Convertible and Income Securities Fund represents the continuation of the fund's policy to distribute a minimum of 8% of its average net asset value annually. What's particularly noteworthy is the composition of this distribution - only 13% comes from actual net investment income, while the vast majority (87%) is classified as return of capital.

This distribution structure essentially means shareholders are largely receiving their own money back rather than profits generated by the fund's investments. Return of capital distributions reduce a shareholder's cost basis and aren't immediately taxable, but they suggest the fund isn't generating sufficient earnings to cover its distribution commitments through genuine investment returns.

The fund's approach of maintaining a fixed distribution percentage regardless of actual earnings performance creates predictable income for shareholders but potentially at the expense of gradually eroding the capital base if investment returns don't match or exceed distribution rates. This practice, while providing short-term income stability, may impact long-term total returns if the fund consistently returns more capital than it generates in earnings.

Investors should closely examine whether this high return of capital component reflects temporary market conditions or a more persistent challenge in the fund's ability to generate sufficient income and capital gains to sustainably support its distribution policy.

RYE, N.Y., May 14, 2025 (GLOBE NEWSWIRE) -- The Board of Directors of The Gabelli Convertible and Income Securities Fund Inc. (NYSE:GCV) (the “Fund”) declared a $0.12 per share cash distribution payable on June 23, 2025 to common stock shareholders of record on June 13, 2025.

The Fund intends to pay a minimum annual distribution of 8% 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 in 2025 to common shareholders with respect to the Fund’s fiscal year ending September 30, 2025 would include approximately 13% from net investment income and 87% 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 2025 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 2025 distributions in early 2026 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:

Laurissa Martire
(914) 921-5399

About Gabelli Convertible and Income Securities Fund
The Gabelli Convertible and Income Securities Fund Inc. is a diversified, closed-end management investment company with $82 million in total net assets whose primary investment objective is to seek a high level of total return on its assets through a combination of current income and capital appreciation. The Fund is managed by Gabelli Funds, LLC, a subsidiary of GAMCO Investors, Inc. (OTCQX: GAMI).

NYSE: GCV

CUSIP – 36240B109

THE GABELLI CONVERTIBLE AND INCOME SECURITIES FUND INC.
Investor Relations Contact:
Laurissa Martire
(914) 921-5399
lmartire@gabelli.com

FAQ

What is GCV's latest dividend distribution amount and payment date?

GCV declared a $0.12 per share cash distribution, payable on June 23, 2025, to shareholders of record on June 13, 2025.

What percentage of GCV's 2025 distribution comes from investment income vs return of capital?

Based on current accounting records, approximately 13% comes from net investment income and 87% is classified as return of capital.

What is GCV's minimum annual distribution policy?

The Fund aims to distribute a minimum of 8% of its average net asset value within a calendar year.

How are GCV's distributions taxed for shareholders?

Distributions may be treated as long-term capital gain or qualified dividend income, subject to a maximum 20% federal tax rate, plus a potential 3.8% Medicare surcharge for eligible individuals.

When will GCV shareholders receive tax information for 2025 distributions?

Shareholders with taxable accounts will receive Form 1099-DIV with detailed tax treatment information in early 2026.