JOHN HANCOCK PREMIUM DIVIDEND FUND NOTICE TO SHAREHOLDERS - SOURCES OF DISTRIBUTION UNDER SECTION 19(a)

Rhea-AI Summary

John Hancock Premium Dividend Fund (PDT) announced a monthly distribution of $0.0825 per share to all shareholders of record as of January 12, 2024. The distribution sources include net investment income, net realized short-term capital gains, and return of capital. The average annual total return for the 5 years ended on December 31, 2023, was 6.14%, and the cumulative total return for the fiscal year through December 31, 2023, was 14.00%.

Financial Analyst

The distribution announcement by John Hancock Premium Dividend Fund (PDT) reveals a significant portion of the payout, 64%, is classified as a return of capital or other capital source. This practice can maintain a high distribution rate but may also indicate that the fund's investments are not generating enough income to cover the distributions, potentially eroding the fund's capital over time. The annualized distribution rate of 8.33% against a NAV 5-year average annual total return of 6.14% suggests that the fund is distributing more than it earns, which could be unsustainable in the long-term.

Tax Advisor

For shareholders, the tax implications of the distribution components are critical. The return of capital portion is not immediately taxable but reduces the cost basis of the investment, leading to potentially higher capital gains taxes when shares are sold. The breakdown of the distribution between net investment income and realized capital gains affects the tax rate on distributions, as they may be taxed at different rates depending on the shareholder's tax situation.

Market Research Analyst

Comparing the cumulative fiscal year-to-date distribution rate of 2.08% to the cumulative total return of 14.00% for the same period suggests that the fund's NAV has appreciated. However, investors should consider whether the fund's strategy aligns with their investment goals, especially in terms of income generation versus capital growth. The reliance on return of capital for distributions might be a red flag for those seeking income from their investments as it indicates that the fund's income and capital gains are not sufficient to cover the distributions.

BOSTON, Jan. 31, 2024 /PRNewswire/ - John Hancock Premium Dividend Fund (NYSE: PDT) (the "Fund"), a closed-end fund managed by John Hancock Investment Management LLC and subadvised by Manulife Investment Management (US) LLC, announced today sources of its monthly distribution of $0.0825 per share paid to all shareholders of record as of January 12, 2024, pursuant to the Fund's managed distribution plan. This press release is issued as required by an exemptive order granted to the Fund by the U.S. Securities and Exchange Commission.     

Notification of Sources of Distribution

This notice provides shareholders of the John Hancock Premium Dividend Fund (NYSE: PDT) with important information concerning the distribution declared on January 2, 2024, and payable on January 31, 2024. No action is required on your part.

Distribution Period:	January 2024
Distribution Amount Per Common Share:	$0.0825

The following table sets forth the estimated sources of the current distribution, payable January 31, 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 01/1/2024-01/31/2024				For the fiscal year-to-date period 11/1/2023-01/31/2024 1
Source		Current Distribution ($)		% Breakdown of the Current Distribution		Total Cumulative Distributions ($)		% Breakdown of the Total Cumulative Distributions
Net Investment Income		0.0174		21 %		0.1373		55 %
Net Realized Short- Term Capital Gains		0.0127		15 %		0.0211		9 %
Net Realized Long- Term Capital Gains		0.0000		0 %		0.0000		0 %
Return of Capital or Other Capital Source		0.0524		64 %		0.0891		36 %
Total per common share		0.0825		100 %		0.2475		100 %
Average annual total return (in relation to NAV) for the 5 years ended on December 31, 2023								6.14 %
Annualized current distribution rate expressed as a percentage of NAV as of December 31, 2023								8.33 %
Cumulative total return (in relation to NAV) for the fiscal year through December 31, 2023								14.00 %
Cumulative fiscal year-to-date distribution rate expressed as a percentage of NAV as of December 31, 2023								2.08 %

 

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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 January 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 $0.0825 per share, which will continue to be paid monthly until further notice.

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 the United States securities laws. You should exercise caution in interpreting and relying on forward-looking statements because they are subject to uncertainties and other factors which are, in some cases, beyond the Fund's control and could cause actual results to differ materially from those set forth in the forward-looking statements.

An investor should consider a Fund's investment objectives, risks, charges and expenses carefully before investing.

About John Hancock Investment Management

A company of Manulife Investment Management, we serve investors through a unique multimanager approach, complementing our extensive in-house capabilities with an unrivaled network of specialized asset managers, backed by some of the most rigorous investment oversight in the industry. The result is a diverse lineup of time-tested investments from a premier asset manager with a heritage of financial stewardship.

About Manulife Investment Management

Manulife Investment Management is the global brand for the global wealth and asset management segment of Manulife Financial Corporation. We draw on more than a century of financial stewardship and the full resources of our parent company to serve individuals, institutions, and retirement plan members worldwide. Headquartered in Toronto, our leading capabilities in public and private markets are strengthened by an investment footprint that spans 18 geographies. We complement these capabilities by providing access to a network of unaffiliated asset managers from around the world. We're committed to investing responsibly across our businesses. We develop innovative global frameworks for sustainable investing, collaboratively engage with companies in our securities portfolios, and maintain a high standard of stewardship where we own and operate assets, and we believe in supporting financial well-being through our workplace retirement plans. Today, plan sponsors around the world rely on our retirement plan administration and investment expertise to help their employees plan for, save for, and live a better retirement. Not all offerings are available in all jurisdictions. For additional information, please visit manulife.com.

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SOURCE John Hancock Investment Management

FAQ

What is the monthly distribution announced by John Hancock Premium Dividend Fund (PDT)?

The monthly distribution announced by John Hancock Premium Dividend Fund (PDT) is $0.0825 per share.

What are the sources of the distribution?

The sources of the distribution include net investment income, net realized short-term capital gains, and return of capital or other capital source.

What is the average annual total return for the 5 years ended on December 31, 2023?

The average annual total return for the 5 years ended on December 31, 2023, was 6.14%.

What is the cumulative total return for the fiscal year through December 31, 2023?

The cumulative total return for the fiscal year through December 31, 2023, was 14.00%.