Source Capital, Inc. Boosts Shareholder Value with Special Distribution

Source Capital, Inc. (NYSE: SOR), a closed-end investment company managed by First Pacific Advisors, LP, recently announced a special distribution on its common stock. The distribution, estimated to be approximately 1%-3% of net asset value (NAV), is a testament to the Fund's commitment to returning capital to shareholders while maintaining a balanced investment strategy.

The special distribution, payable on January 9, 2025, to shareholders of record as of December 30, 2024, is expected to impact the company's NAV and share price. Assuming a NAV of $100 per share, a 3% distribution would result in a NAV reduction to $97 per share. However, the share price may also be affected, potentially trading at a discount to NAV post-distribution. The exact impact on the share price will depend on market sentiment and other factors.

The special distribution is estimated to be approximately $1-$3 per share, which would increase the Fund's dividend yield from 5.93% to approximately 6.5%. The payout ratio, currently around 100% based on the 2024 annual dividend of $2.06 per share, would remain unchanged, as the special distribution is a one-time event.



Source Capital, Inc.'s investment objective is to seek maximum total return for shareholders from both capital appreciation and investment income. The Fund's strategy involves investing in longer duration assets like dividend-paying equities and illiquid assets like private loans, targeting a long-term investment horizon of at least five years. The special distribution aligns with the Fund's commitment to generating income for shareholders while maintaining a balanced approach to investing.

The Fund's distribution rate may be affected by various factors, including changes in market conditions, Fund performance, and other factors. While the special distribution may temporarily boost the Fund's distribution rate, it is essential to consider that the rate may fluctuate in the future. Investors should monitor the Fund's performance and distribution rate closely and remain aware of the potential risks and uncertainties associated with closed-end funds.

In conclusion, Source Capital, Inc.'s special distribution on its common stock is a positive development for shareholders, demonstrating the Fund's commitment to returning capital while maintaining a balanced investment strategy. The special distribution is expected to impact the company's NAV, share price, dividend yield, and payout ratio. As the Fund continues to focus on generating income for shareholders, investors should monitor its performance and distribution rate closely.