Royce Micro-Cap Trust, Inc. (NYSE-RMT) declares First Quarter Common Stock Distribution of $0.17 Per Share
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Insights
The declaration of a quarterly distribution of $0.17 per share by Royce Micro-Cap Trust, Inc. (RMT) reflects a distribution policy that aims to provide shareholders with a regular income stream. This distribution represents an annual rate of 7% based on the rolling average of the prior four quarter-end net asset values (NAVs), which is a relatively aggressive payout policy compared to the broader market, where dividend yields often range between 1-4%. The option for stockholders to receive the distribution in the form of additional shares or cash provides flexibility and could influence the tax implications for the recipients.
It is notable that the distribution is not derived from net investment income but rather from net realized short-term and long-term gains. This composition suggests that the fund is actively realizing gains from its investments, which may indicate a robust trading strategy or a favorable market for the fund's holdings. However, investors should be aware that distributions that do not come from net investment income could potentially erode the fund's capital base over time if not offset by portfolio appreciation.
Investors and market observers often scrutinize the source of distributions for funds like RMT. The lack of net investment income as a source for the current distribution may raise questions about the fund's ability to generate income through its underlying investments. This could be a red flag for income-focused investors who prefer distributions to be covered by investment income rather than capital gains, which are less predictable and can fluctuate with market conditions.
The pricing of shares issued for reinvestment, to be determined on March 18, 2024, will be an important factor for investors who opt for reinvestment. It will affect the value of the additional shares they receive and could influence their decision-making process regarding taking distributions in cash or stock. The fund's distribution policy, particularly the commitment to a 7% annual rate, is ambitious and may be attractive to yield-seeking investors, but it also warrants close monitoring for sustainability over multiple market cycles.
The choice between receiving distributions in cash or reinvesting in additional shares is a crucial decision for shareholders from a tax perspective. Receiving the distribution in cash could result in immediate tax liabilities, while opting for reinvestment may defer taxes until the sale of the newly acquired shares. Shareholders should consult their tax advisors to understand the implications based on their individual tax situations and the specific tax treatment of short-term versus long-term capital gains distributions.
Furthermore, the IRS requires a minimum distribution and the fourth quarter distribution being the greater of 1.75% of the rolling average or the minimum distribution required by IRS regulations indicates that the fund is structured to comply with these rules. Shareholders should be cognizant of how these distributions align with their tax planning, particularly in light of the fund's policy which is subject to change at the discretion of the Board of Directors.
The Fund has adopted a Distribution Policy of paying quarterly distributions on its Common Stock. Distributions are being made at the annual rate of
The Fund's estimated sources of the distribution to be paid on March 22, 2024 and for 2024 year-to-date are as follows:
Estimated Allocations as of February 29, 2024
Fund |
Distribution Per Share |
Net Investment Income | Net Realized Short-Term Gains | Net Realized Long-Term Gains |
Return of Capital |
RMT |
Estimated Allocations for 2024 through February 29, 2024
Fund |
Distribution Per Share |
Net Investment Income | Net Realized Short-Term Gains | Net Realized Long-Term Gains |
Return of Capital |
RMT |
You should not draw any conclusions about the Fund's investment performance from the amount of the current distribution or from the terms of the Fund's Distribution Policy. The amounts and sources of distributions reported herein 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.
Fund Performance and Distribution Rate Information:
Fund | Average Annual | Annualized |
Cumulative Total |
Cumulative Fiscal |
RMT | 10.77 % | 6.43 % | 0.96 % | 1.61 % |
1 Average Annual Total Return in relation to NAV represents the compound average of the Annual NAV Total Returns of the Fund for the five-year period ended February 29, 2024. Annual NAV Total Return is the percentage change in the Fund's NAV over a year, assuming reinvestment of distributions paid.
2 The Annualized Current Distribution Rate is the current fiscal period's distribution rate annualized as a percentage of the Fund's NAV as of February 29, 2024.
3 Cumulative Total Return is the percentage change in the Fund's NAV from December 31, 2023 to February 29, 2024, assuming reinvestment of distributions paid.
4 The Cumulative Fiscal Year Distribution Rate is the dollar value of distributions for the fiscal year period (January 1, 2024 to February 29, 2024), as a percentage of the Fund's NAV as of February 29, 2024.
About Royce Micro-Cap Trust, Inc.
Royce Micro-Cap Trust, Inc. is a closed-end diversified management investment company whose shares of Common Stock are listed and traded on the New York Stock Exchange. The Fund's investment goal is long-term capital growth, which it seeks by investing primarily in equity securities of companies that, at the time of investment, have market capitalizations of
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SOURCE Royce Micro-Cap Trust, Inc.
FAQ
What is the quarterly distribution amount declared by Royce Micro-Cap Trust, Inc. (NYSE-RMT)?
When will the quarterly distribution be paid to stockholders?
What is the Fund's Distribution Policy regarding quarterly distributions?
What are the estimated sources of the distribution for Royce Micro-Cap Trust, Inc. (NYSE-RMT) for 2024 year-to-date?
