Q: Was wandering about their .07cent distribution that was cut from .08cents in April of 2023,looks like it coincided with a run up on rates from 2-3 years previous to that,since that time most of their top ten holdings in the fund have increased their dividend each year.My question ,is their a metric of some kind that would determine if they would reinstate that distribution back to .08cents or do you know how that is determined,I’m a retired long term holder of ZWU and very happy with its income stability
Thanks
Thanks
5i Research Answer:
The managers would have a few considerations in setting the distribution such as premiums available and ensuring the amount is sustainable so they do not have to dip into NAV. It has been at 7 cents for some time now and with a 6.4% yield currently, we would expect the managers to view the yield as healthy and an uptick in the distribution as not adding a whole lot of marginal value at this stage, which would take it from a yield in the 6.4% range to 8.1%, but also potentially limiting the capital gains side of the equation (reinvesting less of the distributions).
Authors of this answer, directors, partners and/or officers of 5i Research and/or affiliated companies have a financial or other interest in ZWU.