XAI Octagon Trust Announces Monthly Distribution and Dividend
XAI Octagon Floating Rate & Alternative Income Trust Updates
Recently, XAI Octagon Floating Rate & Alternative Income Trust (the "Trust") announced its regular monthly distribution for common shares, providing investors with an exciting update. This distribution is set at $0.070 per share, and it highlights the Trust's commitment to its shareholders. Additionally, the Trust confirmed quarterly preferred dividends of $0.40625 per share for the 6.50% Series 2026 Term Preferred Shares.
Key Dates for Shareholders
Shareholders of both common and preferred shares should note the following crucial dates concerning these declarations. For the common shares (NYSE: XFLT), the ex-dividend date is on July 15, 2025, with the record date also on the same day. The payable date for the distributions will be August 1, 2025. In contrast, the preferred shares (NYSE: XFLTPRA) have a similar timeline, also with ex-dividend and record dates on July 15, 2025, and the payable date on July 31, 2025.
Understanding Distribution Sources
The distributions declared by the Trust may derive from various sources, including net investment income, capital gains, and potential returns of capital. While such distributions can provide regular income, it's important for shareholders to understand that not all distributions come from net income or profits. Each year, the Trust will inform its common shareholders of the specific tax characteristics of these distributions via Form 1099.
Investment Strategy and Tax Implications
As a registered investment company, the Trust adheres to specific regulations regarding its distributions. To avoid a 4% excise tax, it must distribute a minimum percentage of both its ordinary and capital gain income to its common shareholders annually. This framework ensures that the Trust remains in good standing while aiming to provide consistent returns.
Returns of Capital Explained
Additionally, it’s essential for investors to recognize that sometimes, common share distributions may exceed the net investment income for a period. This can imply that part of the payment is a return of capital, essentially a partial reimbursement of the initial investment, which may have tax implications. While this doesn’t usually trigger immediate taxes, it can affect the shareholder's tax basis and potential gain or loss on future sales of shares.
Financial Performance and Future Outlook
The Trust continuously evaluates its financial performance and the capacity to maintain consistent distributions. Future distributions will depend on various factors including net investment income, compliance with financial covenants related to senior securities, and overall market conditions. While the intention is to stabilize and potentially grow the payouts, adjustments may be necessary based on economic circumstances.
Investment Goals of the Trust
The overarching goal of the Trust is to achieve an attractive total return with a focus on income generation through a diverse portfolio in the private credit market. The strategy typically involves allocating at least 80% of its managed assets into floating rate credit instruments and structured credit investments, making it important for the Trust to navigate the complexities of this investment landscape.
About XA Investments
XA Investments LLC, or XAI, serves as the investment advisor for the Trust. Established in Chicago in 2016 by XMS Capital Partners, XAI manages two listed closed-end funds along with an interval fund. They focus on structuring and consulting services aimed at meeting the investment needs of both individual and institutional clients.
Broader Implications of the Investment Strategies
By offering access to a range of alternative investment strategies, XAI strives to enhance opportunities for retail investors, aiming to bridge the gap that often exists in accessing institutional-caliber managers. For those interested in exploring these investment opportunities further, XAI has been recognized for helping demystify complex investment strategies for individual investors.
Media Contact Information
For media inquiries, you can reach out to Kimberly Flynn, President of XA Investments LLC, via phone at 888-903-3358 or email her at KFlynn@XAInvestments.com. For more details on the Trust and its updates, visit www.xainvestments.com.
Frequently Asked Questions
What is the monthly distribution declared for common shares?
The monthly distribution for common shares is $0.070 per share.
When will the dividend payments be made?
The payable date for the common shares is August 1, 2025, while for preferred shares, it's July 31, 2025.
What sources can the Trust use for its distributions?
Distributions may come from net investment income, capital gains, or return of capital.
How does the Trust avoid the excise tax?
The Trust must distribute a minimum percentage of its ordinary and capital gain income each year to avoid a 4% excise tax.
What is the investment strategy of the Trust?
The Trust aims for attractive total returns with a focus on income generation, primarily investing in the credit market.
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