XAI Octagon Floating Rate & Alternative Income Trust offers a high 14.55% distribution rate but involves significant risks due to its leverage and CLO equity exposure. XFLT trades at a 0% discount to NAV, below historical averages, making its current valuation reasonable compared to peers. High fees and reliance on leverage make XFLT risky, especially in economic downturns, despite its attractive distribution rate.
CHICAGO, March 03, 2025 (GLOBE NEWSWIRE) -- XAI Octagon Floating Rate & Alternative Income Trust (the “Trust”) has declared its regular monthly distribution of $0.077 per share on the Trust's common shares (NYSE: XFLT), payable on April 1, 2025, to common shareholders of record as of March 17, 2025, as noted below. The amount of the distribution represents no change from the previous month's distribution amount of $0.077 per common share.
CHICAGO, Feb. 20, 2025 (GLOBE NEWSWIRE) -- XAI Octagon Floating Rate & Alternative Income Trust (NYSE: XFLT) (the “Trust”) today announced that it plans to host the Trust's Quarterly Webinar on March 5, 2025 at 11:00 am (Eastern Time). Kevin Davis, Managing Director at XA Investments (“XAI”) will moderate the Q&A style webinar with Kimberly Flynn, President at XAI, and Lauren Law, Senior Portfolio Manager at Octagon Credit Investors.
XFLT and EIC are high-yielding, leveraged closed-end funds focused on CLOs, offering double-digit yields, but these can come with higher risks and volatility. XFLT combines CLO exposure with senior secured loan investments, while EIC focuses primarily on junior debt tranches of CLOs, making EIC relatively less risky. Both funds will have sensitivity to interest rate changes, which we saw with XFLT recently cutting its distribution after the Fed cut 100 basis points.
The XAI Octagon Floating Rate & Alternative Income Trust is a high-yield, high-risk closed-end fund primarily invested in senior secured debt and CLO equity. XFLT offers a high yield of 14%, but has seen a recent reduction in its dividend in recent months. XFLT is currently trading at a discount to NAV, presenting a potentially attractive entry point for aggressive income investors.
CHICAGO, Feb. 03, 2025 (GLOBE NEWSWIRE) -- XAI Octagon Floating Rate & Alternative Income Trust (the “Trust”) has declared its regular monthly distribution of $0.077 per share on the Trust's common shares (NYSE: XFLT), payable on March 3, 2025, to common shareholders of record as of February 18, 2025, as noted below. The amount of the distribution represents no change from the previous month's distribution amount of $0.077 per share.
XAI Octagon Floating Rate & Alternative Income Trust (XFLT) faces challenges due to interest rate cuts, which will reduce net investment income and reduce the dividend payouts. XFLT's strategy focuses on floating rate debt investments, benefiting from higher rates but also facing risks from potential borrower defaults and leverage costs. If rates remain higher for longer, there's a chance that we can see a greater amount of borrower defaults. This would deteriorate the overall portfolio quality and earnings potential.
XAI Octagon Floating Rate & Alternative Income Trust trades at a premium due to high monthly distributions, but recently cut its distribution yield to 13.71%. Despite skepticism about long-term sustainability, XFLT's premium is now closer to similar funds, prompting an upgrade from hold to buy. Leverage stacking in XFLT's strategy poses significant risk, but current market conditions and seasonality trends make it a reasonable short-term hold.
XFLT.PR.A preferred shares offer a stable 6.4% yield unaffected by lower Fed Funds, making them an attractive hold in today's monetary easing environment. The CEF portfolio includes leveraged loans, CLO debt, and CLO equity, providing diversified exposure and reduced volatility compared to pure CLO Equity CEFs. Preferred shares, characterized as liabilities, have a fixed maturity in March 2026, ensuring minimal price volatility and stable quarterly dividends.
The XAI Octagon Floating Rate & Alternative Income Trust offers an enticingly high yield, but recently cut its monthly payout, sending the shares lower. XFLT's portfolio primarily consists of floating-rate instruments, making it sensitive to interest rate changes, and that includes the downside of it when the Fed is cutting rates. Despite the distribution cut, it is still a fairly attractive higher-risk investment option for income investors as the premium came down.