Gabelli Global Utility & Income Trust Continues Monthly Distributions, Declares Distributions of $0.10 Per Share
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The declaration of fixed monthly cash distributions by The Gabelli Global Utility & Income Trust indicates a stable dividend policy, which is often seen as a sign of financial health and consistent cash flow generation. Investors typically value such predictability, as it provides a clearer expectation of returns. However, it is crucial to note that the distribution rate is not equivalent to dividend yield or total return. The distinction is important because the yield is calculated based on the current market price, not the fixed distribution amount. Therefore, if the market price of the shares fluctuates significantly, the actual yield received by investors could differ from the distribution rate.
Furthermore, the possibility of an adjusting distribution in December to comply with the Internal Revenue Code requirements suggests that the Fund's earnings are not guaranteed to match or exceed the distributions. This could imply that some of the distributions might be a return of capital rather than earnings, which is not taxable but reduces the shareholder's cost basis. This aspect of the distribution policy could affect the long-term capital appreciation potential of an investment in the Fund.
Understanding the tax implications of the distributions is essential for shareholders. The Fund's distributions may be composed of long-term capital gains, qualified dividend income, or a return of capital, each with different tax treatments. Long-term capital gains and qualified dividends are taxed at preferential rates, currently up to 20%, whereas a return of capital is generally not taxable but reduces the cost basis, which could affect the taxable amount when the shares are eventually sold.
The additional 3.8% Medicare surcharge on net investment income for certain high-income individuals adds another layer to the tax considerations. Shareholders need to be aware of these potential tax liabilities and how they might impact their overall investment strategy and after-tax return.
From a market perspective, the continuation of fixed monthly distributions might indicate a stable or conservative approach by the Fund's management. In volatile markets, such strategies can be appealing to risk-averse investors seeking steady income. However, the Fund's performance relative to the market and its peer group is a critical factor. If the Fund's net asset value (NAV) is declining or not performing in line with the market or its peers, the attractiveness of the fixed distribution policy may be diminished.
It's also important for investors to consider the Fund's underlying portfolio and how it's positioned in the current financial environment. For utility and income-focused funds, the interest rate environment and regulatory changes can significantly impact performance. Investors should look beyond the distribution policy and evaluate the Fund's total return, which includes both income and capital gains.
RYE, N.Y., Feb. 14, 2024 (GLOBE NEWSWIRE) -- The Board of Trustees of The Gabelli Global Utility & Income Trust (NYSE American: GLU) (the “Fund”) approved the continuation of its policy of paying fixed monthly cash distributions. The Board of Trustees declared cash distributions of
| Distribution Month | Record Date | Payable Date | Distribution Per Share | |
| April | April 16, 2024 | April 23, 2024 | ||
| May | May 16, 2024 | May 23, 2024 | ||
| June | June 13, 2024 | June 21, 2024 | ||
Under the Fund’s initial distribution policy, the Fund has paid a minimum annual distribution of
Each quarter, the Board of Trustees reviews the amount of any potential distribution from the income, realized capital gain, or capital available. The Board of Trustees will continue to monitor the Fund’s distribution level, taking into consideration the Fund’s net asset value and the financial market environment. If necessary, the Fund will pay an adjusting distribution in December which includes any additional income and net realized capital gains in excess of the monthly distributions for that year to satisfy the minimum distribution requirements of the Internal Revenue Code for regulated investment companies. The Fund’s distribution policy is subject to modification by the Board of Trustees 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
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 be deemed
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:
Adam Tokar
(914) 457-1079
About The Gabelli Global Utility & Income Trust
The Gabelli Global Utility & Income Trust is a diversified, closed-end management investment company with
NYSE American – GLU
CUSIP – 36242L105
Investor Relations Contact:
Adam Tokar
(914) 457-1079
atokar@gabelli.com
FAQ
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