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XFLT - OFS Credit's Phantom 15% Distribution Yield
XAI Octagon Floating Rate & Alternative Income Term Trust of Beneficial Interest
Who can blame OCCI for wanting to compete with the big kids in the CLO fund world, Eagle Point Credit and Oxford Lane Capital?
So its 15% distribution yield tops the charts and looks pretty impressive.
Until you read the fine print and see it's really a 3.75% cash payout and the rest is stock that can only be turned into cash by diluting your holding.
NII coverage for the theoretical 15% payout is a paltry 54%, way below its competitors.
If OCCI labeled its payout as 3.75%, coverage would be an impressive 271%; but how many investors would choose that, with the option a real 10% from ECC or OXLC?