JOHN HANCOCK PREMIUM DIVIDEND FUND - NOTICE TO SHAREHOLDERS - SOURCES OF DISTRIBUTION UNDER SECTION 19(a)
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The announcement by John Hancock Premium Dividend Fund (PDT) regarding its monthly distribution is a key piece of information for investors and analysts monitoring dividend income and fund performance. The distribution of $0.0825 per share reflects a significant portion of return of capital or other capital source (49%), which could imply that the fund's earnings are not fully covering the distributions and part of the payout may be a return of the investor's own capital. This can be a red flag for sustainability of dividend payouts over the long term.
Moreover, the fund's annualized current distribution rate of 8.61% compared to the average annual total return of 4.17% suggests a high payout relative to the fund's net asset value growth, potentially indicating an aggressive distribution policy. This could attract income-focused investors but also warrants careful monitoring for its impact on the fund's capital over time.
Analyzing the distribution components and rates of return provides insight into the John Hancock Premium Dividend Fund's market positioning and performance. With no net realized long-term capital gains reported, the fund's strategy may be more focused on income generation rather than capital appreciation. This could appeal to a specific investor demographic seeking regular income streams.
The cumulative total return of 9.51% for the fiscal year indicates a positive performance in relation to the fund's net asset value. However, the cumulative fiscal year-to-date distribution rate of 1.43% as a percentage of NAV raises questions about the fund's ability to maintain such distributions without eroding the principal value, especially in volatile market conditions or during periods of lower market returns.
From a taxation perspective, the breakdown of the John Hancock Premium Dividend Fund's distribution is crucial. The return of capital portion (49%) is typically not taxed immediately as income but reduces the cost basis of the investment, potentially resulting in higher capital gains taxes upon sale of the shares. Investors must consider the tax implications of these distributions, especially those in higher tax brackets or those with significant investments in the fund.
Understanding the source of the distributions can also guide investors in tax planning, as the different components of the distribution—net investment income, short-term capital gains and return of capital—are subject to different tax rates. Properly accounting for these can optimize an investor's tax liability and improve after-tax returns.
This notice provides shareholders of the John Hancock Premium Dividend Fund (NYSE: PDT) with important information concerning the distribution declared on December 1, 2023, and payable on December 29, 2023. No action is required on your part.
Distribution Period: December 2023
Distribution Amount Per Common Share:
The following table sets forth the estimated sources of the current distribution, payable December 29, 2023, 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 12/1/2023-12/31/2023
| For the fiscal year-to-date period 11/1/2023-12/31/2023 1
| |||||||
Source | Current | % Breakdown | Total Cumulative | % Breakdown | ||||
Net Investment Income | 0.0374 | 45 % | 0.1146 | 69 % | ||||
Net Realized Short- Term Capital Gains | 0.0050 | 6 % | 0.0148 | 9 % | ||||
Net Realized Long- Term Capital Gains | 0.0000 | 0 % | 0.0000 | 0 % | ||||
Return of Capital or Other Capital Source | 0.0401 | 49 % | 0.0356 |
22 % | ||||
Total per common share | 0.0825 | 100 % | 0.1650 | 100 % | ||||
Average annual total return (in relation to NAV) for the 5 years ended on November 30, 2023 | 4.17 % | |||||||
Annualized current distribution rate expressed as a percentage of NAV as of November 30, 2023 | 8.61 % | |||||||
Cumulative total return (in relation to NAV) for the fiscal year through November 30, 2023 | 9.51 % | |||||||
Cumulative fiscal year-to-date distribution rate expressed as a percentage of NAV as of November 30, 2023 | 1.43 % | |||||||
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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 December 2023 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 distribution amount per common share for December 2023 for John Hancock Premium Dividend Fund (PDT)?
What are the sources of the current distribution for John Hancock Premium Dividend Fund (PDT) in December 2023?
What is the average annual total return for John Hancock Premium Dividend Fund (PDT) for the 5 years ended on November 30, 2023?
What is the annualized current distribution rate expressed as a percentage of NAV for John Hancock Premium Dividend Fund (PDT) as of November 30, 2023?
What is the cumulative total return for John Hancock Premium Dividend Fund (PDT) for the fiscal year through November 30, 2023?
What is the cumulative fiscal year-to-date distribution rate expressed as a percentage of NAV for John Hancock Premium Dividend Fund (PDT) as of November 30, 2023?
