Carador Income Fund has provided an update on its dividend strategy and outlook for 2016. The company says that, on the basis of current market conditions and the construction of the Company’s portfolio, the Directors anticipate that for 2016 the Company will achieve a target annual dividend of $0.090 per U.S. Dollar Share (distributed evenly in four quarterly payments). Based on the closing share price of $0.6538 on 26 January 2016 this would equate to a prospective dividend yield of 13.77%. The company says that dividends are expected to be covered from net cashflows (after reinvestment of a proportion of the cashflows from Income Notes in accordance with the Company’s investment policy).
This represents a slight reduction in the anticipated dividend for the year ending 31 December 2016 and the company say that is driven primarily by a reduction in the portfolio’s allocation to Income Notes during 2015 (in favour of an increase in the allocation to cash in order to offer some downside protection to the Company’s net asset value). They say that the current target of $0.090 per U.S. Dollar Share is based on the current portfolio composition. However, should there be a reversion of the weighting between Mezzanine Notes and Income Notes during the year, as currently anticipated by GSO / Blackstone Debt Funds Management LLC, the Company’s Manager, then the historic target annual dividend of $0.100 per U.S. Dollar Share may be achievable (with any undistributed income retained as a revenue reserve).
Carador’s target annual dividend is reduced to US$0.90 per share : CIFU