Destra Multi-Alternative Fund's 12.1% Dividend Hike: A High-Yield Alternative in a Low-Rate World

In a world where traditional income investments like bonds and savings accounts offer paltry returns, the Destra Multi-Alternative Fund (DMA) has emerged as a compelling option for yield-hungry investors. On October 6, 2025, the fund announced a 12.1% increase in its monthly distribution, raising the payout to $0.0925 per share for October and November 2025. This adjustment translates to an annualized yield of approximately 10.80% at net asset value (NAV) and a striking 12.94% at the market price of $8.58 per share as of October 2, 2025, according to the Destra announcement. For income-focused investors, this move underscores DMA's positioning as a high-yield alternative to conventional fixed-income assets, particularly in a low-interest-rate environment where traditional options struggle to compete.

A Diversified Strategy for Resilient Income

DMA's investment approach is rooted in alternative asset classes, including real estate investment trusts (REITs), corporate bonds, bank loans, and structured notes, with a strategic use of leverage (13.74% effective leverage as of September 2023) to amplify returns, according to its CEF Connect profile. This diversification allows the fund to generate income from non-correlated sources, reducing exposure to the volatility of traditional equity or bond markets. According to a report by CEF Connect, the fund's focus on alternative credit and real estate-sectors less sensitive to interest rate fluctuations-positions it to deliver consistent cash flows even in uncertain macroeconomic conditions, as noted by CEF Connect.

The recent dividend increase reflects strong portfolio management, as highlighted by Fund President Robert A. Watson and Portfolio Manager Mark Scalzo of Validex Global Investing. They emphasized that the hike is supported by the fund's ability to capitalize on high-yield opportunities in real estate and private equity, which have historically provided stable returns, according to the Destra announcement. However, investors must balance this optimism with caution: DMA's total return on NAV over the past 12 months was -1.36%, indicating that while income generation remains robust, capital preservation has been a challenge, per CEF Connect.

Sustainability and Risk Considerations

The sustainability of DMA's elevated yield hinges on its managed distribution policy, which bases payouts on realized earnings and income rather than a fixed structure. This approach, adopted in 2023, aligns distributions with the fund's investment strategy and market conditions, according to the fund's semi-annual filing. While the 12.1% increase is a positive signal, the fund's 3.75% annual expense ratio-a relatively high figure for a closed-end fund-could pressure long-term returns. Additionally, the use of leverage, while beneficial in amplifying gains, introduces risk if asset values decline or interest rates rise sharply.

Despite these risks, DMA's dividend appears resilient. Historical data shows a consistent monthly payout pattern, with the September 2025 distribution at $0.0825 per share yielding 10.17% (TTM)-already above the average of the top 25% of Financial Services sector dividend payers, as shown in that filing. The fund's Dividend Reinvestment Plan (DRP) further enhances its appeal, allowing shareholders to reinvest distributions automatically and compound returns, as noted in the announcement.

A High-Yield Alternative in a Low-Rate World

For investors seeking alternatives to traditional income vehicles, DMA's 12.94% yield at market price is particularly enticing. In a low-interest-rate environment, where 10-year Treasury yields hover near 2% and savings accounts offer negligible returns, the fund's focus on alternative assets provides a stark contrast. Its exposure to real estate and private equity-sectors with inherent inflation protection-adds another layer of appeal. As noted by Validex Global Investing, the fund's non-correlated strategies are designed to thrive in diverse market cycles, making it a potential hedge against economic downturns, according to the announcement.

However, investors must weigh the trade-offs. The fund's -1.36% NAV return over the past year highlights the risks of prioritizing income over capital appreciation. Those with a lower risk tolerance or a focus on long-term growth may find DMA's strategy too aggressive. Yet for those prioritizing cash flow, the fund's recent performance and strategic diversification suggest it can deliver resilient returns in a challenging yield landscape.

Conclusion

Destra Multi-Alternative Fund's 12.1% dividend increase cements its role as a high-yield alternative to traditional income investments. While its leverage and expense ratio warrant scrutiny, the fund's strategic focus on alternative assets and strong income generation capabilities make it a compelling option for investors willing to accept higher risk for elevated returns. In a world where conventional yields remain anemic, DMA's bold move reflects both confidence in its portfolio and a recognition of the shifting demands of income-focused investors.