Clough Global Dividend and Income Fund Section 19(a) Notice
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The distribution announcement by the Clough Global Dividend and Income Fund highlights a significant return of capital, accounting for 90.48% of the current distribution. This is a critical observation as it implies that the majority of the payout is not from earned income or realized capital gains, but rather from the capital initially invested by shareholders. A return of capital of this magnitude suggests that the fund may not be generating sufficient income or capital gains to support its distributions, which could potentially be a red flag for investors seeking sustainable dividend income.
Furthermore, the fund's past performance, with a five-year average annual total return on NAV of only 0.73%, raises questions about its ability to deliver competitive returns over the long term. The disparity between the annualized distribution rate of 9.99% and the cumulative total return on NAV of 9.80% for the fiscal year-to-date indicates that the fund's distributions may be inflating the perceived yield, potentially misleading investors about the true performance of their investment.
From a tax perspective, the classification of distributions is crucial for shareholders. The fund's statement indicates that the actual amounts and sources for tax reporting will depend on the fund's investment experience for the remainder of the fiscal year. Investors should be aware that a return of capital reduces their cost basis in the investment, which can affect capital gains calculations when shares are sold. It is also important to note that a return of capital does not equate to a realized profit and can have different tax implications compared to dividends derived from net investment income or realized capital gains.
It is essential for shareholders to understand that the Form 1099-DIV received will ultimately dictate the tax treatment of these distributions and that they should consult with a tax professional to accurately report their income and understand the implications of these distributions on their individual tax situation.
Analyzing the fund's distribution composition in the context of the broader closed-end fund market, it appears that the Clough Global Dividend and Income Fund's high return of capital percentage is atypical. Typically, investors seek closed-end funds for income generated from dividends and capital gains, not capital return. This distribution structure could impact the fund's appeal in the marketplace, as it may deter income-focused investors who prioritize funds with stronger income-generating capabilities.
Moreover, the fund's market price will be influenced by investor perception and demand, which could be affected by the sustainability of its distribution policy. The reliance on return of capital to maintain distribution levels may lead to skepticism about the fund's long-term value proposition, potentially affecting its market price and liquidity. Market participants would benefit from a comparative analysis of similar funds' distribution policies and performance metrics to better understand where the Clough Global Dividend and Income Fund stands in relation to its peers.
Statement Pursuant to Section 19(a) of the Investment Company Act of 1940
DENVER, CO / ACCESSWIRE / January 31, 2024 / On January 31, 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 ($) | % | ||||||
Net Investment Income | 0.00501 | 9.52 | % | ||||
Net Realized Short-Term Capital Gain | 0.00000 | 0.00 | % | ||||
Net Realized Long-Term Capital Gain | 0.00000 | 0.00 | % | ||||
Return of Capital or other Capital Source | 0.04759 | 90.48 | % | ||||
Total (per common share) | 0.05260 | 100.00 | % | ||||
| Fiscal Year-to-Date Cumulative Distributions from: | |||||||
| Per Share ($) | % | ||||||
Net Investment Income | 0.02449 | 14.24 | % | ||||
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 | 0.14751 | 85.76 | % | ||||
Total (per common share) | 0.17200 | 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 12/31/2023) | ||||||||||
Annualized Distribution Rate as a Percentage of NAV^ | 9.99 | % | ||||||||
Cumulative Distribution Rate on NAV^+ | 2.72 | % | ||||||||
Cumulative Total Return on NAV* | 9.80 | % | ||||||||
Average Annual Total Return on NAV for the 5 Year Period Ending 12/31/2023** | 0.73 | % | ||||||||
Past performance is not indicative of future results.
^ Based on the Fund's NAV as of December 31, 2023.
+Cumulative distribution rate is based on distributions paid to date for the period November 1, 2023 through
January 31, 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 December 31, 2023.
**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
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