Gabelli Global Utility & Income Trust Continues Monthly Distributions, Declares Distributions of $0.10 Per Share

Rhea-AI Summary

The Gabelli Global Utility & Income Trust (GLU) continues its fixed monthly cash distributions, declaring $0.10 per share for April, May, and June 2024. The Fund aims to pay a minimum annual distribution of 6% of the IPO price. Distribution policy subject to Board of Trustees' modifications.

Insights

Financial Analyst

The declaration of fixed monthly cash distributions by The Gabelli Global Utility & Income Trust indicates a stable dividend policy, which is often seen as a sign of financial health and consistent cash flow generation. Investors typically value such predictability, as it provides a clearer expectation of returns. However, it is crucial to note that the distribution rate is not equivalent to dividend yield or total return. The distinction is important because the yield is calculated based on the current market price, not the fixed distribution amount. Therefore, if the market price of the shares fluctuates significantly, the actual yield received by investors could differ from the distribution rate.

Furthermore, the possibility of an adjusting distribution in December to comply with the Internal Revenue Code requirements suggests that the Fund's earnings are not guaranteed to match or exceed the distributions. This could imply that some of the distributions might be a return of capital rather than earnings, which is not taxable but reduces the shareholder's cost basis. This aspect of the distribution policy could affect the long-term capital appreciation potential of an investment in the Fund.

Tax Advisor

Understanding the tax implications of the distributions is essential for shareholders. The Fund's distributions may be composed of long-term capital gains, qualified dividend income, or a return of capital, each with different tax treatments. Long-term capital gains and qualified dividends are taxed at preferential rates, currently up to 20%, whereas a return of capital is generally not taxable but reduces the cost basis, which could affect the taxable amount when the shares are eventually sold.

The additional 3.8% Medicare surcharge on net investment income for certain high-income individuals adds another layer to the tax considerations. Shareholders need to be aware of these potential tax liabilities and how they might impact their overall investment strategy and after-tax return.

Market Research Analyst

From a market perspective, the continuation of fixed monthly distributions might indicate a stable or conservative approach by the Fund's management. In volatile markets, such strategies can be appealing to risk-averse investors seeking steady income. However, the Fund's performance relative to the market and its peer group is a critical factor. If the Fund's net asset value (NAV) is declining or not performing in line with the market or its peers, the attractiveness of the fixed distribution policy may be diminished.

It's also important for investors to consider the Fund's underlying portfolio and how it's positioned in the current financial environment. For utility and income-focused funds, the interest rate environment and regulatory changes can significantly impact performance. Investors should look beyond the distribution policy and evaluate the Fund's total return, which includes both income and capital gains.

RYE, N.Y., Feb. 14, 2024 (GLOBE NEWSWIRE) -- The Board of Trustees of The Gabelli Global Utility & Income Trust (NYSE American: GLU) (the “Fund”) approved the continuation of its policy of paying fixed monthly cash distributions. The Board of Trustees declared cash distributions of $0.10 per share for each of April, May, and June 2024.

Distribution Month	Record Date	Payable Date	Distribution Per Share
April	April 16, 2024	April 23, 2024	$0.10
May	May 16, 2024	May 23, 2024	$0.10
June	June 13, 2024	June 21, 2024	$0.10

Under the Fund’s initial distribution policy, the Fund has paid a minimum annual distribution of 6% of the initial public offering price of $20.00 per share (a distribution of $0.10 per share each month).

Each quarter, the Board of Trustees reviews the amount of any potential distribution from the income, realized capital gain, or capital available. The Board of Trustees will continue to monitor the Fund’s distribution level, taking into consideration the Fund’s net asset value and the financial market environment. If necessary, the Fund will pay an adjusting distribution in December which includes any additional income and net realized capital gains in excess of the monthly distributions for that year to satisfy the minimum distribution requirements of the Internal Revenue Code for regulated investment companies. The Fund’s distribution policy is subject to modification by the Board of Trustees 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 for long term capital gains, 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, each of the distributions paid to common shareholders in 2024 would be deemed 100% from paid-in capital on a book basis. This 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 (www.gabelli.com). The final determination of the sources of all distributions in 2024 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 2024 distributions in early 2025 via Form 1099-DIV.

Investors should carefully consider the investment objectives, risks, charges, and expenses of the Fund before investing. For more information regarding the Fund’s distribution policy and other information about the Fund, call:

Adam Tokar
(914) 457-1079

About The Gabelli Global Utility & Income Trust
The Gabelli Global Utility & Income Trust is a diversified, closed-end management investment company with $120 million in total net assets whose primary investment objective is to seek a consistent level of after-tax total return for its investors with an emphasis on tax-advantaged dividend income under current tax law. The Fund is managed by Gabelli Funds, LLC, a subsidiary of GAMCO Investors, Inc. (OTCQX: GAMI).

NYSE American – GLU
CUSIP – 36242L105

Investor Relations Contact:
Adam Tokar
(914) 457-1079
atokar@gabelli.com

FAQ

What is the distribution per share declared by The Gabelli Global Utility & Income Trust (GLU) for April, May, and June 2024?

The Board of Trustees declared cash distributions of $0.10 per share for each of April, May, and June 2024.

What is the minimum annual distribution percentage set by The Gabelli Global Utility & Income Trust (GLU)?

The Fund aims to pay a minimum annual distribution of 6% of the initial public offering price of $20.00 per share.

Is the distribution policy of The Gabelli Global Utility & Income Trust (GLU) subject to changes?

Yes, the distribution policy is subject to modification by the Board of Trustees at any time.

How are distributions from The Gabelli Global Utility & Income Trust (GLU) taxed?

Distributions may be treated as long-term capital gain or qualified dividend income, subject to federal income tax rates. Shareholders should consult tax professionals for individual tax implications.