John Hancock Preferred Income Fund III Announces $0.11 Dividend — Market Impact on Ex-Dividend Date

Introduction

John Hancock Preferred Income Fund III (HPS) has reaffirmed its commitment to income generation for shareholders by announcing a $0.11 per share cash dividend. This payment, with an ex-dividend date of August 11, 2025, aligns with the fund’s consistent approach to dividend distribution and is in line with its role as a preferred income vehicle within the broader BDC (Business Development Company) and closed-end fund space. The announcement comes amid a relatively stable market environment, with investors closely monitoring how the stock price will adjust on the ex-dividend date.

Dividend Overview and Context

Understanding key dividend metrics is essential for investors looking to assess the impact of this payout. The ex-dividend date marks the first day a stock trades without its dividend entitlement, typically leading to a share price reduction equal to the dividend amount. For HPS, which pays a cash dividend of $0.11 per share, the ex-dividend date of August 11 means that buyers on that date will not receive the upcoming payout. This can temporarily affect liquidity and price dynamics around the event.

Backtest Analysis

A historical backtest of HPS reveals that the stock typically recovers its dividend value within 4.79 days on average, with an 88% probability of full recovery within 15 days. This demonstrates a strong and predictable rebound pattern post-ex-dividend, reinforcing the fund’s reputation for stability. The backtest methodology covers historical dividend events, including reinvestment assumptions and price movements, to evaluate performance trends after payouts.

Driver Analysis and Implications

The recent financial report highlights a robust operational performance, with a net income of $24.9 million and total basic earnings per common share of $0.7780. While the latest report does not provide a direct payout ratio, the fund’s ability to maintain consistent dividends is supported by its strong income from continuing operations and relatively low interest expense. These factors suggest financial discipline and a sustainable payout model.

Externally, the broader market environment has favored income-generating assets like HPS, especially in a low-yield climate. Investors are increasingly favoring securities that offer predictable returns, making HPS an attractive option for those seeking yield without excessive risk.

Investment Strategies and Recommendations

• Short-Term (Dividend Capture Strategy): Investors can consider purchasing shares before the ex-dividend date and holding through the adjustment period, leveraging HPS’s predictable price rebound.
• Long-Term (Income Focus): For long-term income investors, HPS provides a reliable source of monthly income, supported by its strong earnings and historical dividend consistency.
• Risk Consideration: While the backtest indicates a high probability of price recovery, investors should remain mindful of macroeconomic shifts that could affect market sentiment, especially in BDCs and preferred funds.

Conclusion & Outlook

John Hancock Preferred Income Fund III’s $0.11 dividend on August 11, 2025, continues its pattern of reliable income distribution. Supported by strong earnings and a solid track record of post-dividend price recovery, the fund remains a viable option for income-focused investors. As the market continues to favor yield-driven strategies, HPS positions itself well for both short-term dividend capture and long-term capital preservation. Investors may want to monitor the fund’s next earnings report for further insight into its operational strength and potential future dividend performance.