NXG NextGen Infrastructure Income Fund (NYSE: NXG) Announces Distributions

Rhea-AI Summary

NXG NextGen Infrastructure Fund (NXG) has declared monthly distributions of $0.54 per common share for February, March, April, and May 2024. The return of capital estimate is 100%. The Fund's Board of Trustees has also approved the continuation of the waiver of the Fund's management fees in the amount of 0.25% of the Fund's Managed Assets for the next twelve months.

Financial Analyst

The declaration of monthly distributions by NXG NextGen Infrastructure Fund (NXG) represents a significant commitment to shareholder returns, particularly with the 100% return of capital estimate. This indicates that the distributions are likely not derived from the fund's income or capital gains but from the shareholders' original investment capital. This could suggest that the fund's underlying assets may not be generating sufficient income, which is a concern for long-term value growth. However, it also implies a current focus on providing immediate liquidity to shareholders.

From a financial perspective, the continuity of distributions at a steady rate demonstrates stability, which can be attractive to income-focused investors. The deferral clause, allowing the Board of Trustees to postpone distributions if necessary, adds a layer of financial prudence, ensuring that the fund can maintain solvency and meet its obligations. This is a safeguard that can reassure investors about the fund's risk management practices.

The waiver of management fees is another positive aspect for shareholders, as it effectively increases the net return on their investment. By reducing the expense ratio, NXG is enhancing its competitive position in the market. This strategic move could attract new investors looking for cost-efficient investment opportunities.

Tax Advisor

For tax-conscious investors, the classification of distributions as a return of capital is a critical factor. It can defer the recognition of capital gains until the sale of the fund shares, potentially reducing the current tax liability. However, it also reduces the cost basis of the investment, which could result in higher capital gains taxes in the future when shares are sold.

Investors should be aware that the final tax treatment of these distributions will only be confirmed after the end of the fiscal year, which introduces some uncertainty. The preliminary estimate of the return of capital is subject to change based on the fund's actual earnings and profits, as well as realized gains and losses on the sale of securities throughout the year.

It is important for shareholders to consult with tax professionals to understand the implications of these distributions on their personal tax situations, especially since the final tax status may differ substantially from the preliminary information provided by NXG.

Market Research Analyst

The infrastructure sector, in which NXG operates, is typically characterized by long-term, stable investments. The decision to maintain monthly distributions at a consistent rate could be a strategic move to align with the expectations of investors in this sector, who often prioritize regular income streams.

However, the 100% return of capital estimate might raise questions among market analysts about the fund's performance and asset growth potential. It is essential to compare NXG's distribution strategy and return of capital estimate with industry benchmarks to assess competitiveness and sustainability.

The waiver of management fees for the next twelve months could signal an attempt by NXG to remain attractive in a competitive market, especially if other funds in the sector are not offering similar concessions. This could be a response to market pressures or an effort to increase market share by offering a more appealing cost structure to potential investors.

DALLAS, Feb. 1, 2024 /PRNewswire/ -- NXG NextGen Infrastructure Fund (NYSE: NXG) (the "Fund") declared monthly distributions of $0.54 per common share for each of February, March, April, and May 2024.  These monthly distributions will be payable to common shareholders pursuant to the table below:

Record Date	Ex-Dividend Date	Payment Date	Distribution Amount	Return of Capital Estimate1
February 15, 2024	February 14, 2024	February 29, 2024	$0.54	100 %
March 15, 2024	March 14, 2024	March 28, 2024	$0.54	100 %
April 15, 2024	April 12, 2024	April 30, 2024	$0.54	100 %
May 15, 2024	May 14, 2024	May 31, 2024	$0.54	100 %

¹The return of capital estimate is based on the Fund's current anticipated earnings and profits for the fiscal year and does not include a projection of gains and losses on the sale of securities which may occur during the remainder of the year.  It is currently anticipated, but not certain, that approximately 100% of the Fund's distributions will be treated as a return of capital. The final determination of such amounts will be made and reported to shareholders in 2025, after the end of the calendar year when the Fund determines its earnings and profits for the year. The final tax status of each distribution may differ substantially from this preliminary information.

The distribution shall be paid on the payment date unless the payment of such distribution is deferred by the Fund's Board of Trustees upon a determination that such deferral is required in order to comply with applicable law or to ensure that the Fund remains solvent and able to pay its debts as they become due and continue as a going concern.

In addition, the Fund's Board of Trustees has approved a continuation of the waiver of the Fund's management fees in the amount of 0.25% of the Fund's Managed Assets for the next twelve months.

ADDITIONAL INFORMATION ABOUT THE FUND

The Fund is a closed-end management investment company with an investment objective of seeking a high total return with an emphasis on current income. The Fund seeks to achieve its investment objective by investing, under normal market conditions, at least 80% of its net assets, plus any borrowings for investment purposes, in a portfolio of equity and debt securities of infrastructure companies, including: (i) energy infrastructure companies, (ii) industrial infrastructure companies, (iii) sustainable infrastructure companies, and (iv) technology and communication infrastructure companies. The Fund will invest no more than 25% of its Managed Assets in securities of energy master limited partnerships ("MLPs") that qualify as publicly traded partnerships under the Internal Revenue Code. The Fund's shares are traded on the New York Stock Exchange under the symbol "NXG."

There can be no assurance that the Fund will achieve its investment objectives. Investments in the Fund involve operating expenses and fees. The net asset value of the Fund will fluctuate with the value of the underlying securities. It is important to note that closed-end funds trade on their market value, not net asset value, and closed-end funds often trade at a discount to their net asset value.  Future distributions will be made by the Fund if and when declared by the Fund's Board of Trustees, based on a consideration of number of factors, including the Fund's continued compliance with terms and financial covenants of its leverage financing facility, the Fund's net investment income, financial performance, and available cash.

There can be no assurance that the amount or timing of distributions in the future will be equal or similar to that described herein or that the Board of Trustees will not decide to suspend or discontinue the payment of distributions in the future.

ABOUT NXG Investment Management

Cushing® Asset Management, LP ("Cushing") is an SEC-registered investment adviser headquartered in Dallas, Texas. Cushing serves as investment adviser to affiliated funds and managed accounts. Cushing is doing business as NXG Investment Management providing Next Generation investment strategies to investors seeking long-term growth in companies focused on a clean and sustainable future as well as traditional and transformational infrastructure companies.

Contact: 
Blake Nelson
NXG Investment Management
214-692-6334
www.nxgim.com

IMPORTANT INFORMATION

This press release shall not constitute an offer to sell or a solicitation to buy, nor shall there be any sale of these securities in any state or jurisdiction in which such offer or solicitation or sale would be unlawful prior to registration or qualification under the laws of such state or jurisdiction.

This press release contains certain statements that may include "forward-looking statements" within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. All statements, other than statements of historical fact, included herein are "forward-looking statements." Although the Fund and Cushing believe that the expectations reflected in these forward-looking statements are reasonable, they do involve assumptions, risks and uncertainties, and these expectations may prove to be incorrect. Actual results could differ materially from those anticipated in these forward-looking statements as a result of a variety of factors, including those discussed in the company's reports that are filed with the Securities and Exchange Commission. You should not place undue reliance on these forward-looking statements, which speak only as of the date of this press release. Other than as required by law, the Fund and Cushing do not assume a duty to update this forward-looking statement.

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SOURCE NXG Investment Management

FAQ

What are the monthly distributions declared by NXG for February, March, April, and May 2024?

NXG has declared monthly distributions of $0.54 per common share for February, March, April, and May 2024.

What is the return of capital estimate for the monthly distributions?

The return of capital estimate for the monthly distributions is 100%.

What has the Fund's Board of Trustees approved for the next twelve months?

The Fund's Board of Trustees has approved the continuation of the waiver of the Fund's management fees in the amount of 0.25% of the Fund's Managed Assets for the next twelve months.