Clough Global Dividend and Income Fund Section 19(a) Notice
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The Clough Global Dividend and Income Fund's distribution announcement reveals a substantial return of capital, accounting for 96.86% of the current distribution. This is indicative of the Fund's current inability to generate sufficient investment income or capital gains to cover distributions, which may raise concerns about sustainability of dividend payments. A high return of capital percentage could signal that the fund is eroding investor principal over time, potentially impacting the fund's net asset value (NAV) and investor returns in the long run.
Furthermore, the Fund's past performance, with a five-year average annual total return on NAV of only 0.18%, suggests a period of underperformance, which could affect investor sentiment and the fund's market price. Investors should consider the Fund's distribution approach and past performance in relation to their investment goals, especially if they are seeking income generation over principal return.
From a tax perspective, the distinction between distribution sources is crucial. The Fund's notice clarifies that the reported amounts and sources are estimates and not for tax reporting purposes. The high percentage of distribution classified as return of capital is not subject to immediate taxation but reduces the cost basis of the investment, potentially resulting in higher capital gains taxes when shares are sold. Investors should anticipate receiving a Form 1099-DIV to accurately report these distributions for federal income tax purposes.
It is important for investors to understand the tax implications of return of capital distributions and to consult with a tax professional to accurately assess the impact on their individual tax situations. This is particularly relevant as return of capital can affect the timing and magnitude of taxable events associated with the investment.
An investment strategist would evaluate the Fund's distribution in the context of its overall investment strategy and market conditions. The Fund's annualized distribution rate as a percentage of NAV is 9.89%, which is relatively high and may be attractive to income-focused investors. However, the high return of capital suggests that the Fund may be distributing more than what it earns, which could lead to a reduction in NAV if the trend continues. This practice may not be sustainable in the long term and could lead to a reassessment of the Fund's investment strategy.
Additionally, the cumulative total return on NAV of 11.91% for the fiscal year-to-date indicates that the Fund has had some success in generating returns over the short term. However, investors should be cautious when annual returns are significantly reliant on return of capital, as it might not reflect true investment gains and could mislead investors regarding the Fund's performance.
Statement Pursuant to Section 19(a) of the Investment Company Act of 1940
DENVER, CO / ACCESSWIRE / February 29, 2024 / On February 29, 2024, the Clough Global Dividend and Income Fund (NYSE American:GLV) (the "Fund"), a closed-end fund, paid a monthly distribution on its common stock of
The following table sets forth the estimated amount of the sources of distribution for purposes of Section 19 of the Investment Company Act of 1940, as amended, and the related rules adopted thereunder. The Fund estimates the following percentages, of the total distribution amount per share, attributable to (i) current and prior fiscal year net investment income, (ii) net realized short-term capital gain, (iii) net realized long-term capital gain and (iv) return of capital or other capital source as a percentage of the total distribution amount. These percentages are disclosed for the current distribution as well as the fiscal year-to-date cumulative distribution amount per share for the Fund.
Current Distribution from: | ||||||||
| Per Share ($) | % | |||||||
Net Investment Income | 0.00165 | 3.14 | % | |||||
Net Realized Short-Term Capital Gain | 0.00000 | 0.00 | % | |||||
Net Realized Long-Term Capital Gain | 0.00000 | 0.00 | % | |||||
Return of Capital or other Capital Source | 0.05095 | 96.86 | % | |||||
Total (per common share) | 0.05260 | 100.00 | % | |||||
Fiscal Year-to-Date Cumulative Distributions from: | ||||||||
| Per Share | ($) | |||||||
Net Investment Income | 0.02614 | 11.64 | % | |||||
Net Realized Short-Term Capital Gain | 0.00000 | 0.00 | % | |||||
Net Realized Long-Term Capital Gain | 0.00000 | 0.00 | % | |||||
Return of Capital or other Capital Source | 0.19846 | 88.36 | % | |||||
Total (per common share) | 0.22460 | 100.00 | % | |||||
The amounts and sources of distributions reported in this 19(a) Notice are only estimates and not for tax reporting purposes. The actual amounts and sources of the amounts for tax reporting purposes will depend upon the Fund's investment experience during the remainder of its fiscal year and may be subject to changes based on tax regulations. The Fund will send you a Form 1099-DIV for the calendar year that will tell you how to report these distributions for federal income tax purposes. The Fund estimates that it has distributed more than its income and net realized capital gains; therefore, a portion of your distribution may be a return of capital. A return of capital may occur for example, when some or all of the money that you invested in the Fund is paid back to you. A return of capital distribution does not necessarily reflect the Fund's investment performance and should not be confused with ‘yield' or ‘income.'
Presented below are return figures, based on the change in the Fund's Net Asset Value per share ("NAV"), compared to the annualized distribution rate for this current distribution as a percentage of the NAV on the last business day of the month prior to distribution record date.
Fund Performance & Distribution Information
| Fiscal Year to Date (11/01/2023 through 1/31/2024) | |||||||
Annualized Distribution Rate as a Percentage of NAV^ | 9.89 | % | |||||
Cumulative Distribution Rate on NAV^+ | 3.52 | % | |||||
Cumulative Total Return on NAV* | 11.91 | % | |||||
| Average Annual Total Return on NAV for the 5 Year Period Ending 1/31/2024** | 0.18 | % | |||||
Past performance is not indicative of future results.
^ Based on the Fund's NAV as of January 31, 2024.
+Cumulative distribution rate is based on distributions paid to date for the period November 1, 2023 through
February 29, 2024.
*Cumulative fiscal year-to-date return is based on the change in NAV including distributions paid and assuming reinvestment of these distributions and that all rights in the Fund's rights offering were exercised, for the period November 1, 2023 through January 31, 2024.
**The 5 year average annual total return is based on change in NAV including distributions paid and assuming reinvestment of these distributions and that all rights in the Fund's rights offering were exercised, as of the last business day of the month prior to the month of the current distribution record date.
While the NAV performance may be indicative of the Fund's investment performance, it does not measure the value of a shareholder's investment in the Fund. The value of a shareholder's investment in the Fund is determined by the Fund's market price, which is based on the supply and demand for the Fund's shares in the open market.
Shareholders should not draw any conclusions about the Fund's investment performance from the amount of this distribution or from the terms of the Fund's Managed Distribution Plan.
Furthermore, the Board of Trustees reviews the amount of any potential distribution and the income, 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. The Fund's distribution policy is subject to modification by the Board of Trustees at any time. The distribution rate should not be considered the dividend yield or total return on an investment in the Fund.
Contact Info:
Website: https://www.cloughcefs.com/
Email: cloughclientinquiries@paralel.com
SOURCE: Clough Global Dividend and Income Fund | GLV
View the original press release on accesswire.com
FAQ
What was the monthly distribution per share paid by Clough Global Dividend and Income Fund (GLV) on February 29, 2024?
What percentage of the total distribution amount per share was attributed to net investment income?
How much of the distribution was from return of capital or other capital sources?
What was the cumulative total return on NAV for Clough Global Dividend and Income Fund (GLV) for the fiscal year to date?
What does a return of capital distribution indicate for investors?
