XAI Octagon Trust Announces Monthly and Quarterly Dividends
XAI Octagon Floating Rate & Alternative Income Trust Dividend Announcement
XAI Octagon Floating Rate & Alternative Income Trust (the "Trust") has officially announced its regular monthly distribution of $0.085 per share for the Trust’s common shares, traded under the symbol NYSE: XFLT. Additionally, the Trust has declared a quarterly preferred shares dividend of $0.40625 for its 6.50% Series 2026 Term Preferred Shares, identified as NYSE: XFLTPRA.
Understanding the Dividend Declarations
Investors should take note of the significant dates associated with these dividend declarations. The ex-dividend date for both common and preferred shares is set for October 15, 2024, with the record date coinciding on the same day. Payouts will occur on November 1, 2024, for common shares and on October 31, 2024, for preferred shares.
Details of the Common Shares
When it comes to the common shares, distributions may come from a range of sources, including net investment income, capital gains, and even returns of capital. For shareholders looking to navigate tax implications, the specific tax characteristics of distributions will be clarified via Form 1099 post the conclusion of the calendar year.
Preferred Shares Dividend Structure
Regarding preferred shares, holders are entitled to receive cumulative cash distributions from the Trust's Term Preferred Shares. These dividends are paid when declared and depend on funds that are legally available. Notably, if the Trust cannot fully distribute the due dividends within a period, the distribution will be executed on a pro rata basis among preferred shareholders.
Investment Strategy and Objectives
The Trust aims to generate an attractive total return with an emphasis on income generation across various phases of the credit cycle. To realize this objective, it maintains a diversified portfolio focused on private credit markets. Typically, the Trust directs at least 80% of its managed assets towards floating rate credit instruments and structured credit investments.
Tax Considerations and Trust Operations
As a registered investment company, the Trust is subject to specific regulations, including a 4% excise tax related to its distribution policies. This is triggered if the Trust fails to distribute at least 98% of its ordinary income and 98.2% of its capital gains by the end of the calendar year.
Moreover, it is essential for shareholders to recognize that common share distributions might exceed the net investment income generated during that duration, indicating that part, or even all, of a distribution may stem from a return of capital. This return of capital does not typically incur taxes at the time of the return, but it can impact potential gains or losses upon the future sale of common shares.
Future Perspectives on Distributions
The Trust's Board of Trustees will continually evaluate the financial factors such as compliance with financial covenants, net investment income, and overall financial performance before declaring future distributions. Thus, shareholders should keep themselves informed, knowing that the amount or timing of future distributions may vary.
About XA Investments and Its Services
XA Investments LLC, commonly referred to as XAI, acts as the investment adviser for the Trust. Since its establishment in 2016 by XMS Capital Partners, based in Chicago, XAI provides a comprehensive range of services, including investment fund structuring and consulting, particularly tailored for registered closed-end funds. The firm strives to connect individual investors with unique investment strategies and opportunities.
Exploring Octagon Credit Investors
Octagon Credit Investors, which plays a crucial role as the investment sub-adviser, has developed a reputable standing over 25 years, focusing on below-investment grade corporate credit investments.
For potential investors, it is essential to assess the Trust's investment objectives and overall risk considerations prior to making investment decisions. Investors should reaffirm their confidence in XAI Octagon Floating Rate & Alternative Income Trust as it embarks on this distribution journey.
Frequently Asked Questions
What dividends has XAI Octagon declared recently?
XAI Octagon has declared a monthly common share distribution of $0.085 and a quarterly preferred share dividend of $0.40625.
When will the dividends be paid?
The common shares' payable date is November 1, 2024, while preferred shares will be paid on October 31, 2024.
How is the source of distribution determined?
The distributions may arise from net investment income, capital gains, or returns of capital, as assessed by the Trust.
What is the role of XA Investments in the Trust?
XA Investments LLC serves as the investment adviser to the Trust, providing essential investment strategies and consulting services.
Why are future dividends uncertain?
The Trust's Board of Trustees will evaluate multiple factors, making it impossible to assure consistency in future distributions.
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