Latest news with #closedendfund
Globe and Mail
01-08-2025
- Business
- Globe and Mail
Angel Oak Financial Strategies Income Term Trust Declares August 2025 Distribution
Angel Oak Financial Strategies Income Term Trust (the 'Fund'), a closed-end fund traded on the New York Stock Exchange under the symbol FINS, today declared a distribution of $0.115 per share for the month of August 2025, equating to an approximate 10% distribution on NAV. FINS intends to maintain its level distribution policy at the new higher distribution rate. The record date for the distribution is August 15, 2025, and the payable date is August 29, 2025. The Fund will trade ex-distribution on August 15, 2025. FINS increased the monthly distribution from $0.109 to $0.115 given the benefit to the Fund from higher coupon investments as Angel Oak Capital Advisors fully optimizes the portfolio into a robust primary issuance market following the recent Rights Offering. Angel Oak Capital Advisors' investment team rapidly deployed proceeds from the Rights Offering into money center and regional bank debt to eliminate cash drag. With the acceleration in the community bank debt issuance calendar, the team has re-deployed approximately half of the proceeds into higher-coupon community bank bonds (average coupon 7.68%, range: 7.00%-9.00%). Coupons on the new bonds are over 100 basis points higher than the Fund's average coupon of 6.51%, as of June 30, 2025. The near-term issuance pipeline remains robust. In addition to the immediate benefit from accretively deploying the new capital, the team believes several factors offer additional upside to NAV in the current environment: Positive tailwinds from strong banking sector fundamentals: Recent second quarter bank earnings highlighted strong credit, improving net interest margins and stronger loan growth. Legacy portfolio benefits from approaching call dates: Over $100 million of fixed rate bank debt in the portfolio will transition from fixed to floating rate over the next 24 months as the bonds enter their call period, resulting in higher coupons (based on current SOFR) and/or the bonds getting called and refinanced by the issuer. Increased M&A activity: Traditionally an alpha generator to the strategy, M&A activity has been accelerating in 2025 under a more favorable regulatory environment. Although the Fund seeks to pay a distribution at a rate that is representative of net investment income actually earned, a portion of each distribution may be treated as paid from sources other than net investment income, including, to the extent permitted by law, short-term capital gain, long-term capital gain, or return of capital. As required by Section 19(a) of the Investment Company Act of 1940, a notice will be distributed to shareholders in the event that a portion of a monthly distribution is derived from sources other than undistributed net investment income. The final determination of the source and tax characteristics of these distributions will depend upon the Fund's investment experience during its fiscal year and will be made after the Fund's year end. The Fund will send to investors a Form 1099-DIV for the calendar year that will define how to report these distributions for federal income tax purposes. ABOUT FINS Led by Angel Oak Capital Advisors' experienced financial services team, FINS invests predominantly in U.S. financial sector debt as well as selective opportunities across financial sector preferred and common equity. Under normal circumstances, at least 50% of FINS' portfolio is publicly rated investment grade or, if unrated, judged to be of investment grade quality by Angel Oak Capital Advisors. ABOUT ANGEL OAK CAPITAL ADVISORS, LLC Angel Oak Capital Advisors is an investment management firm focused on providing compelling fixed-income investment solutions to its clients. Backed by a value-driven approach, Angel Oak Capital Advisors seeks to deliver attractive, risk-adjusted returns through a combination of stable current income and price appreciation. Its experienced investment team seeks the best opportunities in fixed income, with a specialization in mortgage-backed securities and other areas of structured credit. Information regarding the Fund and Angel Oak Capital Advisors can be found at Past performance is neither indicative nor a guarantee of future results. Investors should consider the investment objective and policies, risk considerations, charges and ongoing expenses of an investment carefully before investing. For more information please contact your investment representative or Destra Capital Advisors LLC at 877.855.3434. © 2025 Angel Oak Capital Advisors, which is the investment adviser to the Angel Oak Financial Strategies Income Term Trust.
Yahoo
12-06-2025
- Business
- Yahoo
3 Dividend Stocks With High but Shaky Yields That Are Probably Going to Get Cut
This closed-end fund's net asset value continues to decline, making its distribution appear increasingly untenable. Whirlpool faces significant near-term pressure, and a dividend cut would help ease that. UPS' free cash flow may not cover its dividend in 2025, and there are more effective uses for its cash flow, such as investing in its growth initiatives. 10 stocks we like better than United Parcel Service › With respective dividend or distribution yields of 14.7%, 8.3%, and 6.6%, these three investments could provide an investor with an aggregate yield of 9.9% if purchased together. However, I think that the closed-end Guggenheim Strategic Opportunities Fund (NYSE: GOF), the home appliance company Whirlpool (NYSE: WHR), and UPS (NYSE: UPS) are likely to reduce their dividends or distributions to investors. Furthermore, in two of the cases, doing so would make them stronger companies. Here's why. This is a closed-end fund, meaning it doesn't raise new capital from investors; but it can use debt to generate returns for them. It trades on the market like a stock, and it makes monthly distributions (rather like dividends). The fund has a superb record of making distributions to investors, having maintained them for over a decade. But here's the thing: The fund's net investment income hasn't covered its distribution for the last seven years, and over the previous six years, the fund has used its capital to make distributions. This is to the detriment of its net asset value (NAV), which has declined every year since 2018, and now stands at $11.50. Meanwhile, the fund has effectively increased its leverage to boost its investment income. This isn't a sustainable path, yet the market is pricing it at a 28.5% premium to its NAV. Go figure. The home appliance company is one of the most interesting stocks on the market. Management believes it will benefit from the Trump tariffs and the administration's approach to defending American manufacturing interests, not least by closing a loophole that allows Asian competitors to use Chinese steel in their products and thereby avoid tariffs on it. That may be the case, and it is good news for Whirlpool and its competitive positioning. Still, the company must navigate ongoing weakness in the housing market, which is unlikely to improve until mortgage rates decrease from their relatively high level. High rates discourage home sales, which hurt the higher-margin discretionary appliance sales that Whirlpool needs to boost its earnings. d And the recent easing of the trade conflict may encourage competitors to increase imports to the U.S. as they did in the fourth quarter of 2024 and the first quarter of 2025, ahead of any tariffs imposed by the new regime. It all adds up to an uncertain near-term environment for Whirlpool, and its earnings and cash flow guidance could be under threat. The annual dividend currently uses up $390 million in cash, and management expects $500 million to $600 million in free cash flow (FCF) in 2025. However, it has $1.85 billion in debt maturing in 2025 and plans to pay down $700 million of it through refinancing, with the amount ranging from $1.1 billion to $1.2 billion. Those plans could come under threat if the company misses guidance, and I think that could happen in the current environment. Alongside Whirlpool, UPS will be a better investment if and when it cuts its dividend. The company began the year with management estimating that it would generate $5.7 billion in FCF while paying $5.5 billion in dividends and expecting to make $1 billion in share buybacks. Then, in late April, the impact of tariffs on the economy began to take effect. And management declined to affirm its full-year guidance on the first-quarter earnings call, implying that its FCF guidance is under threat. Furthermore, there's the added complication of UPS deliberately reducing its lower-margin delivery volumes by 50% from 2024 to the second half of 2026. The company's dividend is under threat, and even if management elects to maintain it, there's a powerful argument to say it shouldn't. As previously discussed, the company's investments in technology and refocusing its network on higher-margin and more productive deliveries (such as in the healthcare and small and medium-size business markets) imply that its return on equity (RoE) will improve. That would be a significant plus. Still, it would be an even bigger plus if management could allocate more of its earnings to invest in the business at a higher rate of RoE, rather than using up a significant portion of its cash flow and earnings on dividend payments. A dividend cut would help free up cash for productive investment that would add value for shareholders. Before you buy stock in United Parcel Service, consider this: The Motley Fool Stock Advisor analyst team just identified what they believe are the for investors to buy now… and United Parcel Service wasn't one of them. The 10 stocks that made the cut could produce monster returns in the coming years. Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you'd have $657,871!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you'd have $875,479!* Now, it's worth noting Stock Advisor's total average return is 998% — a market-crushing outperformance compared to 174% for the S&P 500. Don't miss out on the latest top 10 list, available when you join . See the 10 stocks » *Stock Advisor returns as of June 9, 2025 John Mackey, former CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool's board of directors. Lee Samaha has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Amazon and United Parcel Service. The Motley Fool recommends Whirlpool. The Motley Fool has a disclosure policy. 3 Dividend Stocks With High but Shaky Yields That Are Probably Going to Get Cut was originally published by The Motley Fool
