John Hancock Declares Monthly Payout for Its Preferred-Income Closed-End Fund — What Investors Need to Know Now

A routine cash distribution — check the official notice for the exact dates

John Hancock’s closed-end preferred-income fund announced a regular monthly distribution in a shareholder notice. The statement confirms the fund will pay its usual monthly cash amount and sets the administrative dates that determine who receives the payout. Investors who want to be eligible should note the ex-dividend date, the record date and the payment date shown in the fund’s notice and in their brokerage account — those three dates decide whether a trade captures the distribution.

This is a standard move for income-focused closed-end funds: they declare a fixed cash amount and then pay it to holders of record on the stated date. The announcement is routine, not an uncommon special event, but the timing matters because share trading around the ex-dividend date can be volatile. The fund’s official release lists the precise dates and the per-share distribution amount; shareholders should confirm those details in the fund’s notice or on the fund’s investor portal.

How the ex-date, record date and payment timing affect you

The most important trading rule for dividend eligibility is the ex-dividend date. If you buy the fund on or after the ex-dividend date, you will not receive the upcoming payment. If you hold shares through the business day before the ex-date, you will be on the record and eligible for the distribution.

Record date is the administrative cutoff the fund uses to identify shareholders entitled to payment; brokers use the ex-date to manage settlement. Payment date is when cash actually hits accounts. If you’re trading around those dates, expect the market price to typically drop by roughly the cash distribution amount when the stock goes ex-dividend, although market forces and the fund’s discount or premium to net asset value (NAV) can make the move larger or smaller.

Who’s running the fund and how it tries to make income

This vehicle is a closed-end fund managed by John Hancock. It focuses on preferred securities and other income-producing instruments. Closed-end funds raise a fixed pool of assets and trade on exchanges like a stock, which allows them to use leverage and to trade at discounts or premiums to NAV. The strategy here aims to generate steady monthly cash by owning preferred shares and similar instruments, which typically pay higher yields than common stock but can be sensitive to interest-rate moves and credit stress.

Key risk drivers for a preferred-income CEF include interest rates (preferreds act like long-duration bonds in many conditions), credit quality of the underlying securities, the level and cost of leverage the fund uses, and changes in the market’s appetite for income products. Those factors influence both the fund’s income stream and the market price investors pay to buy the shares.

How this payout stacks up: simple yield math and context

To judge the investment case you need to translate the monthly cash amount into an annual yield and compare that to other fixed-income alternatives. The basic math is straightforward: multiply the monthly payout by 12, then divide by the market price to get an annualized cash yield. For example, if the fund pays $0.05 per share each month and the shares trade at $10, the annualized cash yield is (0.05 × 12) ÷ 10 = 6%.

That cash yield is different from the fund’s yield based on NAV and from its distribution coverage, which looks at how much of the payment is coming from earnings versus return of capital or realized gains. Closed-end funds often trade at a discount or premium to NAV. If the fund’s market price is well below NAV, the market yield (cash payout divided by market price) will be higher than the yield calculated off NAV; if it trades at a premium, the market yield will be lower. Investors should watch both measures to judge whether the payout looks attractive or risky.

Likely tax treatment and reporting to expect

Distributions from preferred-income CEFs are typically reported on Form 1099-DIV and can include different tax components. Much of the payment is commonly treated as ordinary income, taxed at your marginal rate. Portions can be qualified dividend income (taxed at lower rates) or return of capital (ROC), which reduces cost basis and defers tax until sale.

Funds usually detail the tax character of distributions at year-end. Expect interim statements to list the gross cash amount, and a final breakdown will appear on your 1099. If part of the payout is ROC, the fund will note it, and that reduces your share cost basis rather than triggering immediate tax.

Practical next steps and the main risks to watch

If you follow this fund for income, open the fund’s recent notice or shareholder letter and confirm the per-share amount and the three key dates. Check the fund page on your broker for ex-dividend timing and watch how the fund’s discount or premium to NAV moves in the days around the ex-date.

Keep the risks front of mind: payout sustainability depends on the fund’s underlying interest income and capital gains. Rising rates, widening credit spreads, changes in leverage cost, or a thinning investor appetite for preferreds can quickly pressure distributions or the market price. For income-seeking investors, the declared monthly distribution is attractive in purpose — it delivers cash — but it is not a guarantee the payout will remain unchanged in tougher markets.

Sources

• prnewswire.com