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Gabelli Convertible and Income Securities Fund Reaffirms Its 8% Distribution Policy and Declares Fourth Quarter Distribution of $0.17 Per Share and Announces Additional Year End Distribution
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Rhea-AI Sentiment
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Rhea-AI Summary
The Gabelli Convertible and Income Securities Fund (NYSE:GCV) announced a cash distribution of $0.17 per share, payable on December 17, 2021, to shareholders of record as of December 10, 2021. This brings the total distribution for 2021 to $0.53 per share. The Fund aims for an annual minimum distribution of 8% of its average net asset value. The Board also authorized an additional year-end distribution, with details to follow. Approximately 3% of 2021 distributions came from net investment income, while 97% stemmed from net capital gains.
Positive
Declared cash distribution of $0.17 per share, increasing total 2021 distributions to $0.53 per share.
Intends to maintain a minimum annual distribution of 8% of average net asset value.
Negative
May not generate sufficient earnings to cover aggregate distributions, potentially leading to return of capital.
RYE, N.Y.--(BUSINESS WIRE)--
The Board of Directors of The Gabelli Convertible and Income Securities Fund Inc. (NYSE:GCV) (the “Fund”) declared a $0.17 per share cash distribution payable on December 17, 2021 to common stock shareholders of record on December 10, 2021. With this fourth quarter distribution, the total distributions from the Fund for 2021 would equate to $0.53 per share. The Fund paid distributions of $0.12 per share in each of the first, second, and third quarters of 2021.
The Fund intends to pay a minimum annual distribution of 8% of the average net asset value of the Fund within a calendar year or an amount sufficient to satisfy the minimum distribution requirements of the Internal Revenue Code for regulated investment companies. Each quarter, the Board of Directors reviews the amount of any potential distribution from the income, realized capital gain, or capital available.
We note that 8% of the average net asset value of the Fund would be $0.53 based on the ending net asset values per share as of December 31, 2020, March 31, 2021, June 30, 2021, and September 30, 2021 of $6.76, $6.54, $6.85, and $6.52, respectively.
The Board of Directors also authorized an additional year end cash distribution in accordance with the minimum distribution requirements for the Internal Revenue Code, which will include any undistributed additional income and realized net capital gains in excess of the quarterly distributions for the year. The amount and dates of the additional distribution will be announced at a later date.
The additional distribution will be included in 2021 income for shareholders subject to income tax and all commons share distributions will have the same proportion of net investment income and short term capital gains.
The Board of Directors will continue to monitor the Fund’s distribution level, taking into consideration the Fund’s net asset value and the financial market environment. The Fund’s distribution policy is subject to modification by the Board of Directors at any time, and there can be no guarantee that the policy will continue. The distribution rate should not be considered the dividend yield or total return on an investment in the Fund.
All or part of the distribution may be treated as long-term capital gain or qualified dividend income (or a combination of both) for individuals, each subject to the maximum federal income tax rate, which is currently 20% in taxable accounts for individuals (or less depending on an individual’s tax bracket). In addition, certain U.S. shareholders who are individuals, estates or trusts and whose income exceeds certain thresholds will be required to pay a 3.8% Medicare surcharge on their "net investment income", which includes dividends received from the Fund and capital gains from the sale or other disposition of shares of the Fund.
If the Fund does not generate sufficient earnings (dividends and interest income, less expenses, and realized net capital gain) equal to or in excess of the aggregate distributions paid by the Fund in a given year, then the amount distributed in excess of the Fund’s earnings would be deemed a return of capital. Since this would be considered a return of a portion of a shareholder’s original investment, it is generally not taxable and would be treated as a reduction in the shareholder’s cost basis.
Long-term capital gains, qualified dividend income, investment company taxable income, and return of capital, if any, will be allocated on a pro-rata basis to all distributions to common shareholders for the year. Based on the accounting records of the Fund currently available, the distributions paid to common shareholders in 2021 would include approximately 3% from net investment income and 97% from net capital gains on a book basis. This information does not represent information for tax reporting purposes. The estimated components of each distribution are updated and provided to shareholders of record in a notice accompanying the distribution and are available on our website. The final determination of the sources of all distributions in 2021 will be made after year end and can vary from the quarterly estimates. Shareholders should not draw any conclusions about the Fund’s investment performance from the amount of the current distribution. All individual shareholders with taxable accounts will receive written notification regarding the components and tax treatment for all 2021 distributions in early 2022 via Form 1099-DIV.
Investors should carefully consider the investment objectives, risks, charges, and expenses of the Fund before investing. More information regarding the Fund’s distribution policy and other information about the Fund is available by calling 800-GABELLI (800-422-3554) or visiting www.gabelli.com.
About Gabelli Convertible and Income Securities Fund
The Gabelli Convertible and Income Securities Fund Inc. is a diversified, closed-end management investment company with $164 million in total net assets whose primary investment objective is to seek a high level of total return on its assets through a combination of current income and capital appreciation. The Fund is managed by Gabelli Funds, LLC, a subsidiary of GAMCO Investors, Inc. (NYSE:GBL).
