The Gabelli Dividend & Income Trust (NYSE:GDV), a closed end fund, will be offering a new issue of preferred stock.
The CEF now has 3 issues outstanding and and you can see them here.
The shares will be cumulative and will pay on the normal quarterly dividend schedule. The new ticker will be GDV-H–no OTC Grey market ticker has been announced yet.
The company has stated they intend to use the proceed from this issue to redeem their auction rate preferreds which are outstanding.
The anticipated rating on these from Moodys is Aa3—strongly investment grade.
Remember that the CEF must have a leverage ratio of 200% or more on senior securities. The assets held by the CEF are Level 1, meaning they are securities traded on an exchange and have directly observable values. The last time we calculated the leverage ratio for this CEF it was over 400%–in fact the company states the ratio of 404% upon this issuance.
Over the last number of quarters the dividend paid by the fund have been a combination of long term gains, investment income and return of capital so it is likely that the preferred dividend will be structured in a similar manner.
It is likely we may buy a little of this issue if we can get it on the Grey market–this would be for our sock drawer.