Tortoise Power and Energy Infrastructure Fund, Inc. Provides Section 19(a) Notice
Tortoise Power and Energy Infrastructure Fund, Inc. (TPZ) announced the distribution paid on January 31, 2024, and cumulative distribution paid fiscal year-to-date. The current distribution breakdown includes net investment income, net realized short-term capital gains, net realized long-term capital gains, and return of capital. The return of capital accounted for 72% of the total distribution. The average annual total return for the 5 years ending on 12/31/2023 was 5.78%. The annualized current distribution rate as a percentage of NAV was 7.72% as of 12/31/2023.
The distribution information provided by Tortoise Power and Energy Infrastructure Fund, Inc. reveals a significant portion of the payout is classified as a return of capital (72%). This is noteworthy because it implies that a large part of the distribution is not sourced from the fund's earnings or capital gains, but rather from the invested capital itself. This could suggest that the fund's income and gains are not sufficient to cover the distributions, which might be a red flag for investors seeking sustainable dividend income. The annualized current distribution rate of 7.72% relative to the NAV as of the end of 2023 appears attractive, but this figure must be considered in the context of the return of capital. Investors should be cautious, as a high distribution rate can erode the fund's capital base over time if not supported by equivalent returns.
From a tax perspective, the breakdown of the distributions is important. The portion categorized as net realized long-term capital gains is subject to preferential tax rates in many jurisdictions compared to ordinary income. However, the fund's report shows a minimal percentage of the distribution comes from long-term capital gains (2%), which means that the tax benefits for investors may be limited. The majority being a return of capital will not immediately be taxable, instead, it reduces the investor's cost basis in the fund, potentially leading to higher capital gains taxes when shares are eventually sold. Investors should consult with tax professionals to understand the implications on their individual tax situations.
Analyzing the fund's performance, the average annual total return of 5.78% over the past five years juxtaposed with the annualized current distribution rate of 7.72% suggests a discrepancy that could concern investors about the fund's ability to maintain its distribution levels without eroding value. Moreover, the cumulative total return of 1.24% for the fiscal year through 12/31/2023, compared to the distributions as a percentage of NAV (1.29%), further reinforces the possibility of the fund's distributions outpacing its actual performance. Market research analysts would advise monitoring the fund's investment strategy and portfolio performance closely to assess whether the high return of capital is a temporary measure or indicative of a more systemic issue within the fund's investment approach.
01/31/2024 - 04:03 PM
LEAWOOD, KS / ACCESSWIRE / January 31, 2024 / This notice provides stockholders of Tortoise Power and Energy Infrastructure Fund, Inc. (NYSE:TPZ) with information regarding the distribution paid on January 31, 2024, and cumulative distribution paid fiscal year-to-date.
The following table sets forth the estimated amounts of the current distribution, paid on January 31, 2024, and the cumulative distribution 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. All amounts are expressed per common share.
Tortoise Power and Energy Infrastructure Fund, Inc.
Estimated Sources of Distributions ($) Current Distribution % Breakdown of the Current Distribution ($) Total Cumulative Distributions for the Fiscal Year to Date % Breakdown of the Total Cumulative Distributions for the Fiscal Year to Date Net Investment Income
0.0273 26 % 0.0545 26 % Net Realized Short-Term Capital Gains
0.0002 0 % 0.0005 0 % Net Realized Long-Term Capital Gains
0.0019 2 % 0.0038 2 % Return of Capital
0.0756 72 % 0.1512 72 % Total (per common share)
0.1050 100 % 0.2100 100 %
Average annual total return (in relation to NAV) for the 5 years ending on 12/31/2023
5.78 % Annualized current distribution rate expressed as a percentage of NAV as of 12/31/2023
7.72 % Cumulative total return (in relation to NAV) for the fiscal year through 12/31/2023
1.24 % Cumulative fiscal year distributions as a percentage of NAV as of 12/31/2023
1.29 %
You should not draw any conclusions about TPZ's investment performance from the amount of this distribution or from the terms of TPZ's distribution policies.
TPZ 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 TPZ is paid back to you. A return of capital distribution does not necessarily reflect TPZ's investment performance and should not be confused with "yield" or "income."
The amounts and sources of distributions reported 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 TPZ's investment experience during the remainder of its fiscal year and may be subject to changes based on tax regulations. TPZ 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.
Tortoise Capital Advisors is the Adviser to the Tortoise Power and Energy Infrastructure Fund, Inc.
For additional information on this fund, please visit cef.tortoiseadvisors.com .
About Tortoise
Tortoise focuses on energy and power infrastructure and the transition to cleaner energy. Tortoise's solid track record of energy value chain investment experience and research dates back more than 20 years. As an early investor in midstream energy, Tortoise believes it is well-positioned to be at the forefront of the global energy evolution that is underway. With a steady wins approach and a long-term perspective, Tortoise strives to make a positive impact on clients and communities. To learn more, visit www.TortoiseAdvisors.com .
Cautionary Statement Regarding Forward-Looking Statements
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 funds and Tortoise Capital Advisors 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 fund'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 funds and Tortoise Capital Advisors do not assume a duty to update this forward-looking statement.
Safe Harbor Statement
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.
Contact Information:
For more information contact Eva Lipner at (913) 981-1020 or info@tortoiseadvisors.com
SOURCE: Tortoise Power and Energy Infrastructure Fund, Inc.
press release on accesswire.com
The ticker symbol for Tortoise Power and Energy Infrastructure Fund, Inc. is TPZ.
The total cumulative distribution for the fiscal year to date was 0.2100 per common share.
72% of the total cumulative distributions for the fiscal year to date was from return of capital.
The average annual total return for the 5 years ending on 12/31/2023 was 5.78%.
The annualized current distribution rate as a percentage of NAV as of 12/31/2023 was 7.72%.
