JOHN HANCOCK PREMIUM DIVIDEND FUND NOTICE TO SHAREHOLDERS - SOURCES OF DISTRIBUTION UNDER SECTION 19(a)
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The announcement of the John Hancock Premium Dividend Fund's monthly distribution provides insight into the fund's current income-generating capabilities. With 94% of the distribution derived from net investment income and the remaining 6% from return of capital, the fund is primarily relying on the income it earns from its investments, rather than capital gains or returning investor's principal. This can be indicative of a conservative investment strategy focused on income-generating assets such as bonds or dividend-paying stocks.
The annualized current distribution rate of 8.43% relative to the Net Asset Value (NAV) as of January 31, 2024, appears attractive, but it's essential to consider the sustainability of such payouts. A high distribution rate can sometimes signal that the fund is paying out more than it earns, which can lead to a reduction in NAV over time. Investors should analyze the fund's underlying assets and performance to assess the long-term viability of the distributions.
From a market perspective, the average annual total return of 4.14% over the past five years, in conjunction with the 13.60% cumulative total return for the fiscal year to date, suggests that the fund has been performing reasonably well in the current market environment. This performance may attract income-focused investors who are looking for steady distributions in a potentially volatile market.
However, it's important to note that a significant portion of the distribution is classified as a return of capital. This could indicate that some of the payouts are not solely from the fund's earnings. While this isn't inherently negative, it's crucial for investors to understand that a return of capital decreases the fund's NAV and can potentially reduce the fund's ability to generate similar yields in the future.
For shareholders, understanding the composition of the fund's distribution is crucial for tax planning. The distinction between net investment income and return of capital has significant tax implications. Investment income is typically taxed at ordinary income rates, whereas return of capital is not taxed immediately but reduces the shareholder's cost basis in the investment. This can lead to a larger capital gain or a smaller capital loss when the shares are eventually sold. Shareholders should consult with tax professionals to understand the impact of these distributions on their individual tax situations.
This notice provides shareholders of the John Hancock Premium Dividend Fund (NYSE: PDT) with important information concerning the distribution declared on February 1, 2024, and payable on February 29, 2024. No action is required on your part.
Distribution Period: | February 2024 |
Distribution Amount Per Common Share |
The following table sets forth the estimated sources of the current distribution, payable February 29, 2024, and the cumulative distributions paid this fiscal year to date from the following sources: net investment income; net realized short term capital gains; net realized long term capital gains; and return of capital or other capital source. All amounts are expressed on a per common share basis and as a percentage of the distribution amount.
For the period 02/1/2024-02/29/2024
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For the fiscal year-to-date period
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Source | Current | % Breakdown | Total Cumulative | % Breakdown | ||||
Net Investment Income | 0.0778 | 94 % | 0.2162 | 66 % | ||||
Net Realized Short- Term Capital Gains | 0.0000 | 0 % | 0.0000 | 0 % | ||||
Net Realized Long- Term Capital Gains | 0.0000 | 0 % | 0.0000 | 0 % | ||||
Return of Capital or Other Capital Source | 0.0047 | 6 % | 0.1138 |
34 % | ||||
Total per common share | 0.0825 | 100 % | 0.3300 | 100 % | ||||
Average annual total return (in relation to NAV) for the 5 years ended on January 31, 2024 | 4.14 % | |||||||
Annualized current distribution rate expressed as a percentage of NAV as of January 31, 2024 | 8.43 % | |||||||
Cumulative total return (in relation to NAV) for the fiscal year through January 31, 2024 | 13.60 % | |||||||
Cumulative fiscal year-to-date distribution rate expressed as a percentage of NAV as of January 31, 2024 | 2.81 % | |||||||
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1 The Fund's current fiscal year began on November 1, 2023 and will end on October 31, 2024. |
You 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.
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."
The amounts and sources of distributions reported in this Notice are only estimates and are not being provided 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 has declared the February 2024 distribution pursuant to the Fund's managed distribution plan (the "Plan"). Under the Plan, the Fund makes fixed monthly distributions in the amount of
If you have questions or need additional information, please contact your financial professional or call the John Hancock Investment Management Closed-End Fund Information Line at 1-800-843-0090, Monday through Friday between 8:00 a.m. and 7:00 p.m., Eastern Time.
Statements in this press release that are not historical facts are forward-looking statements as defined by
An investor should consider a Fund's investment objectives, risks, charges and expenses carefully before investing.
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SOURCE John Hancock Investment Management
FAQ
What is the monthly distribution per share announced by John Hancock Premium Dividend Fund (PDT) for February 2024?
What are the sources of the current distribution of John Hancock Premium Dividend Fund (PDT) for February 2024?
What is the average annual total return for John Hancock Premium Dividend Fund (PDT) for the 5 years ending January 31, 2024?
What is the annualized current distribution rate expressed as a percentage of NAV for John Hancock Premium Dividend Fund (PDT) as of January 31, 2024?
