XAI Octagon Floating Rate & Alternative Income Trust Declares its Monthly Common Shares Distribution of $0.060 per Share

Rhea-AI Summary

XAI Octagon Floating Rate & Alternative Income Trust (NYSE: XFLT) declared a monthly common share distribution of $0.060 per share, payable on January 30, 2026 to holders of record on January 15, 2026. The new payout is a 14.29% decrease from last month’s $0.070 per share.

The Trust cited Federal Reserve rate reductions and continued interest rate spread compression as adverse factors for portfolio income. As of market close on December 31, 2025, the annualized distribution rate is 15.00% on market price and 13.48% on NAV. The Trust noted distributions may include net investment income, capital gains, or return of capital, and final tax characterization will be reported on Form 1099 after 2026.

Positive

• Monthly distribution declared at $0.060 per share
• Annualized distribution rate 15.00% on market price as of 12/31/2025
• Annualized distribution rate 13.48% on NAV as of 12/31/2025

Negative

• Distribution cut of 14.29% from prior month
• Federal Reserve rate reductions and spread compression reduced portfolio income
• Distributions may include return of capital, affecting tax basis

Key Figures

New monthly distribution $0.060 per share Declared for January 30, 2026 payable date

Prior monthly distribution $0.070 per share Previous month’s common share distribution

Distribution decrease 14.29% decrease Change from prior $0.070 monthly distribution

Market price distribution rate 15.00% annualized On market price as of December 31, 2025 close

NAV distribution rate 13.48% annualized On NAV as of December 31, 2025 close

Ex-dividend/Record date January 15, 2026 Ex-dividend and record date for $0.060 distribution

Excise tax threshold 4% excise tax Applied if distribution tests are not met

Ordinary income distribution test 98% of ordinary income Minimum distribution requirement for ordinary income

Market Reality Check

$4.75 Last Close

Volume Volume 1,047,874 is 1.39x the 20-day average of 751,888, indicating elevated trading ahead of this distribution change. normal

Technical Price at 4.80 is trading below the 200-day MA of 5.35, reflecting prior downside pressure before the distribution cut.

Peers on Argus

Peers in Asset Management showed mixed, generally small moves (e.g., FFA +0.09%, HIX -0.48%, PNNT +0.34%), suggesting XFLT’s setup around this distribution cut was more stock-specific than part of a broad sector swing.

Historical Context

Date	Event	Sentiment	Move	Catalyst
Dec 29	Index launch news	Neutral	-0.9%	Advisor launched new alternative credit interval fund index benchmark.
Dec 01	Distribution announcement	Neutral	+0.4%	Monthly distribution maintained at <b>$0.070</b> per share with stable policy language.
Nov 20	Investor webinar	Neutral	+0.7%	Announced Q3 2025 webinar to discuss trust strategy and portfolio positioning.
Nov 03	Distribution announcement	Neutral	+0.6%	Reiterated unchanged monthly payout of <b>$0.070</b> with standard distribution caveats.
Oct 20	Advisor webinar	Neutral	+0.8%	Advisor-hosted webinar on CLO and leveraged loan markets for XFLT investors.

Pattern Detected

Recent company news has typically coincided with modest single-day moves, often slightly positive around routine distribution and webinar announcements.

Recent Company History

Over the last few months, XFLT’s news flow has centered on income-focused communications and investor outreach. The trust repeatedly declared monthly distributions of $0.070 per share in early November and December 2025, emphasizing stable payouts. It also hosted a Q3 2025 webinar on December 2, 2025 and another CLO-focused webinar in October 2025. A December index-related announcement from the advisor saw a small negative move. Against this backdrop, the new cut to $0.060 marks a notable shift from the previously steady distribution level.

Market Pulse Summary

This announcement details a reduction in XFLT’s regular monthly distribution from $0.070 to $0.060 per share, implying annualized rates of 15.00% on market price and 13.48% on NAV as of December 31, 2025. The trust attributes the cut to lower floating-rate income and spread compression and reiterates that distributions may include return of capital. Investors may focus on future Board declarations, portfolio income trends, and how the trust balances stable payouts with underlying cash generation.

Key Terms

floating-rate credit instruments financial

"The Trust’s investment portfolio is primarily comprised of floating-rate credit instruments."

Floating-rate credit instruments are loans or bonds whose interest payments change over time because they are tied to a common market interest rate, so the yield moves up or down as that benchmark moves. For investors, they act like an adjustable-rate mortgage for a bond: they can help protect income when rates rise but carry the same risk that the borrower may default and can produce variable cash flow and price swings as interest rates change.

return of capital financial

"all or a portion of a distribution may be a return of capital, which is in effect..."

Return of capital is when an investor receives money from their investment that is not considered profit or earnings but rather a portion of the original amount they invested. It’s similar to getting back part of your initial savings rather than gains from it. This matters because it can affect how much money an investor still has in the investment and may have tax implications.

clo financial

"The Trust’s investments in CLOs are subject to complex tax rules and the calculation..."

A CLO (Collateralized Loan Obligation) is a financial vehicle that pools many corporate loans and sells slices of that pool to investors, with each slice carrying a different mix of risk and return—think of it as a loan-based fund cut into safe and risky pieces. It matters to investors because CLOs can offer higher yields than traditional bonds but expose buyers to borrowers’ defaults and changes in interest rates, so understanding which slice you own is key to gauging potential reward and loss.

u.s. gaap financial

"for financial reporting purposes under accounting principles generally accepted in the United States (“U.S. GAAP”)"

U.S. GAAP is a set of rules and standards that companies in the United States follow to prepare their financial reports. It helps ensure that financial information is consistent and clear, so investors and others can compare and understand a company's financial health easily.

excise tax financial

"the Trust is subject to a 4% excise tax that is imposed if the Trust does not distribute..."

An excise tax is a government charge levied on specific goods or activities—often applied per unit or as a percentage of price for items like fuel, tobacco, alcohol, or certain services—similar to a per-item toll added at the point of sale. It matters to investors because excise taxes raise costs for producers and consumers, can shrink profit margins or reduce demand, and therefore may affect a company’s revenues, pricing strategy and valuation.

AI-generated analysis. Not financial advice.

CHICAGO, Jan. 02, 2026 (GLOBE NEWSWIRE) -- XAI Octagon Floating Rate & Alternative Income Trust (the “Trust”) has declared its regular monthly distribution of $0.060 per share on the Trust’s common shares (NYSE: XFLT), payable on January 30, 2026, to common shareholders of record as of January 15, 2026, as noted below. The distribution amount represents a 14.29% decrease from the previous month's $0.070 per share.

The Trust’s investment objective is to seek attractive total return with an emphasis on income generation across multiple stages of the credit cycle. The Trust’s investment portfolio is primarily comprised of floating-rate credit instruments. The Federal Reserve’s recent reductions of the federal funds rate, along with continued interest rate spread compression, have negatively impacted income generation within the Trust’s portfolio. With the new distribution amount of $0.060 per share, the Trust’s annualized distribution rate on market price is 15.00%, and the annualized distribution rate on NAV is 13.48% as of market close on December 31, 2025.

The following dates apply to the declaration:

Ex-Dividend Date	January 15, 2026
Record Date	January 15, 2026
Payable Date	January 30, 2026
Amount	$0.060 per common share
Change from Previous Month	14.29% decrease

Common share distributions may be paid from net investment income (regular interest and dividends), capital gains and/or a return of capital. The specific tax characteristics of the distributions will be reported to the Trust’s common shareholders on Form 1099 after the end of the 2026 calendar year. Shareholders should not assume that the source of a distribution from the Trust is net income or profit. For further information regarding the Trust’s distributions, please visit www.xainvestments.com.

The Trust’s net investment income and capital gain can vary significantly over time; however, the Trust seeks to maintain more stable common share monthly distributions over time. The Trust’s investments in CLOs are subject to complex tax rules and the calculation of taxable income attributed to an investment in CLO subordinated notes can be dramatically different from the calculation of income for financial reporting purposes under accounting principles generally accepted in the United States (“U.S. GAAP”), and, as a result, there may be significant differences between the Trust’s GAAP income and its taxable income. The Trust’s final taxable income for the current fiscal year will not be known until the Trust’s tax returns are filed.

As a registered investment company, the Trust is subject to a 4% excise tax that is imposed if the Trust does not distribute to common shareholders by the end of any calendar year at least the sum of (i) 98% of its ordinary income (not taking into account any capital gain or loss) for the calendar year and (ii) 98.2% of its capital gain in excess of its capital loss (adjusted for certain ordinary losses) for a one-year period generally ending on October 31 of the calendar year (unless an election is made to use the Trust’s fiscal year). In certain circumstances, the Trust may elect to retain income or capital gain to the extent that the Board of Trustees, in consultation with Trust management, determines it to be in the interest of shareholders to do so.

The common share distributions paid by the Trust for any particular period may be more than the amount of net investment income from that period. As a result, all or a portion of a distribution may be a return of capital, which is in effect a partial return of the amount a common shareholder invested in the Trust, up to the amount of the common shareholder’s tax basis in their common shares, which would reduce such tax basis. Although a return of capital may not be taxable, it will generally increase the common shareholder’s potential gain, or reduce the common shareholder’s potential loss, on any subsequent sale or other disposition of common shares.

The distribution shall be paid on the Payment Date unless the payment of such distribution is deferred by the Board of Trustees upon a determination that such deferral is required in order to comply with applicable law to ensure that the Trust remains solvent and able to pay its debts as they become due and continue as a going concern, or to comply with the applicable terms or financial covenants of the Trust’s senior securities.

Future common share distributions will be made if and when declared by the Trust’s Board of Trustees, based on a consideration of number of factors, including the Trust’s continued compliance with terms and financial covenants of its senior securities, the Trust’s net investment income, financial performance and available cash. There can be no assurance that the amount or timing of common share 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 common share distributions in the future.

The investment objective of the Trust is to seek attractive total return with an emphasis on income generation across multiple stages of the credit cycle. The Trust seeks to achieve its investment objective by investing in a dynamically managed portfolio of opportunities primarily within the private credit markets. Under normal market conditions, the Trust will invest at least 80% of its Managed Assets in floating rate credit instruments and other structured credit investments. There can be no assurance that the Trust will achieve its investment objective.

The Trust’s common shares are traded on the New York Stock Exchange under the symbol “XFLT”.

About XA Investments

XA Investments LLC (“XAI”) serves as the Trust’s investment adviser. XAI is a Chicago-based firm founded by XMS Capital Partners in 2016. XAI serves as the investment adviser for two listed closed-end funds and an interval closed-end fund. The listed closed-end funds, the XAI Octagon Floating Rate & Alternative Income Trust and XAI Madison Equity Premium Income Fund both trade on the New York Stock Exchange and the interval fund, Octagon XAI CLO Income Fund is available via direct subscription and through select broker/dealers and wealth management platforms.

In addition to investment advisory services, the firm also provides investment fund structuring and consulting services focused on registered closed-end funds to meet institutional client needs. XAI offers custom product build and consulting services, including development and market research, sales, marketing, and fund management.

XAI believes that the investing public can benefit from new vehicles to access a broad range of alternative investment strategies and managers. XAI provides individual investors with access to institutional-caliber alternative managers. For more information, please visit www.xainvestments.com.

About XMS Capital Partners
XMS Capital Partners, LLC, established in 2006, is a global, independent, financial services firm providing M&A, corporate advisory and asset management services to clients. It has offices in Chicago, Boston and London. For more information, please visit www.xmscapital.com.

About Octagon Credit Investors
Octagon Credit Investors, LLC (“Octagon”) serves as the Trust’s investment sub-adviser. Octagon is a 30+ year old, $33.8B below-investment grade corporate credit investment adviser focused on leveraged loan, high yield bond and structured credit (CLO debt and equity) investments. Through fundamental credit analysis and active portfolio management, Octagon’s investment team identifies attractive relative value opportunities across below-investment grade asset classes, sectors and issuers. Octagon’s investment philosophy and methodology encourage and rely upon dynamic internal communication to manage portfolio risk. Over its history, the firm has applied a disciplined, repeatable and scalable approach in its effort to generate attractive risk-adjusted returns for its investors. For more information, please visit www.octagoncredit.com.

XAI does not provide tax advice; please consult a professional tax advisor regarding your specific tax situation. Income may be subject to state and local taxes, as well as the federal alternative minimum tax.

Investors should consider the investment objectives and policies, risk considerations, charges and expenses of the Trust carefully before investing. For more information on the Trust, please visit the Trust’s webpage at www.xainvestments.com.

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.

NOT FDIC INSURED		NO BANK GUARANTEE		MAY LOSE VALUE

Paralel Distributors, LLC - Distributor

Media Contact: 

Kimberly Flynn, President
XA Investments LLC
Phone:  888-903-3358
Email: KFlynn@XAInvestments.com
www.xainvestments.com

FAQ

What distribution did XFLT declare for January 2026 and when is it payable?

XFLT declared a $0.060 per share monthly distribution, payable on January 30, 2026 to shareholders of record on January 15, 2026.

How much did XFLT's distribution change compared with the prior month?

The distribution declined by 14.29% from the previous month’s $0.070 per share.

What are XFLT's reported annualized distribution rates as of 12/31/2025?

As of market close on December 31, 2025, XFLT reported annualized distribution rates of 15.00% on market price and 13.48% on NAV.

Could XFLT's distribution be a return of capital for shareholders?

Yes; the Trust stated distributions may be paid from net investment income, capital gains, and/or return of capital, with tax details to be reported on Form 1099 after 2026.

What reason did XFLT give for lower income generation in the portfolio?

The Trust attributed lower income to Federal Reserve rate reductions and ongoing interest rate spread compression.

Where can shareholders find more information about XFLT distributions and tax treatment?

The Trust directed shareholders to visit www.xainvestments.com and noted final taxable income will be reported after tax returns are filed.