LMP Capital & Income Fund Director Mason Daniel Charles Buys 2,580 Shares

LMP CAPITAL & INCOME FUND INC.[SCD] has announced that Director Mason Peter Daniel Charles has acquired 2,580 shares at a price of $15.59 per share on July 14, 2025.

LMP Capital & Income Fund Inc. (SCD), a closed-end fund known for its high yield, has seen a significant development in its shareholder base. On July 14, 2025, Director Mason Peter Daniel Charles acquired 2,580 shares of the fund at a price of $15.59 per share. This transaction comes amidst ongoing debates about the fund's yield structure and sustainability.

The fund's yield has recently increased to 9.27%, a figure that has drawn the attention of income-seeking investors. However, the mechanics behind this yield raise critical questions. The fund's managed distribution policy guarantees a fixed monthly payout of $0.12 per share, which annualizes to 9.27%. However, the composition of these distributions is concerning. Over the past year, 97.11% of distributions have been sourced from long-term capital gains, with just 2.89% coming from net investment income [1].

The fund's high expense ratio of 2.70%, significantly higher than the average closed-end fund (CEF), also adds to the debate. Combined with 18.7% leverage, this amplifies volatility and reduces the margin for error in its investment strategy.

The risks associated with SCD's high yield are substantial. The fund's reliance on capital gains for its yield, high expenses, and significant leverage create a precarious balancing act. The fund's recent avoidance of return of capital is a positive sign, but history suggests this may not last indefinitely. The fund's NAV has seen a significant drop of -9.9% from late 2024 to mid-2025, highlighting the volatility introduced by leverage.

In June 2025, SCD announced a 1-for-3 rights offering to raise capital and potentially lower its expense ratio. While this could improve liquidity and reduce leverage, it also introduces dilution risk for existing shareholders and market condition risks for new investors.

For income seekers, a small allocation in SCD could be considered, given the current low-yield environment. However, investors should proceed with caution, understanding the risks of return of capital and the volatility introduced by leverage. Those prioritizing capital preservation or disliking leverage should avoid SCD.

In conclusion, SCD's 9.27% yield is a high-risk, high-reward play. Director Charles's acquisition of shares at a price of $15.59 per share reflects his belief in the fund's potential despite the risks. However, investors must weigh the allure of income against the potential erosion of capital and the ever-present risks of leverage.

References:
[1] https://www.ainvest.com/news/scd-9-27-yield-rewarding-opportunity-risky-gamble-2507/