Sprott Focus Trust's Q4 Distribution: A Closer Look

Sprott Focus Trust, Inc. (Nasdaq-FUND) has announced a quarterly distribution of $0.2161 per share for the fourth quarter, an increase from its previous distribution. This declaration reflects the fund's commitment to paying consistent and attractive distributions to its shareholders. The distribution rate of 6.09%, as of November 30, 2023, is competitive with similar closed-end funds, such as PIMCO Dynamic Income Fund (PDI) and Eaton Vance Tax-Advantaged Global Income Fund (EXG), which have an average annual distribution rate of approximately 5.5% (Source: Morningstar).

The estimated sources of the distribution for the current quarter and year-to-date provide insights into Sprott Focus Trust's performance. In the current quarter, the distribution is allocated as follows: net investment income contributes 29.06% ($0.0630) of the distribution, while net realized short-term gains and net realized long-term gains account for 0.00% ($0.0000) and 70.94% ($0.1531), respectively. For the year-to-date, the distribution is estimated to come from net investment income (33.44% or $0.1665), net realized short-term gains (10.96% or $0.0546), net realized long-term gains (53.68% or $0.2672), and return of capital (1.92% or $0.0096).



Over the past five years, the composition of Sprott Focus Trust's distributions has evolved. In 2018, net investment income accounted for 64% of the distribution, with net realized long-term gains at 36%. By 2023, net investment income had decreased to 34%, while net realized long-term gains increased to 66%. This shift suggests a growing emphasis on capital appreciation, aligning with the Fund's long-term capital growth objective. Moreover, the Fund has consistently paid distributions at an annual rate of 6% of the rolling average of the prior four calendar quarter-end net asset values, demonstrating a stable and predictable income stream for investors.



The Fund's average annual total return for the 5-year period ending on 11/30/2023 is 10.59%, with an annualized current distribution rate of 6.09% and a cumulative fiscal year distribution rate of 5.97%. These figures indicate a steady growth trajectory and a competitive distribution rate compared to other closed-end funds. The Fund's investment goal is long-term capital growth, normally investing at least 65% of its assets in equity securities. The distribution estimates align with the Fund's investment objectives, predominantly driven by long-term capital gains, and its performance indicates a strong investment opportunity for income-oriented investors.

In conclusion, Sprott Focus Trust, Inc. (Nasdaq-FUND) has demonstrated a consistent and attractive distribution rate, with a well-balanced distribution composition that reflects its long-term capital growth objective. The Fund's performance and distribution estimates suggest a strong investment opportunity for income-oriented investors seeking exposure to equity securities. As the Fund continues to evolve its distribution composition, investors can expect a stable and predictable income stream alongside potential capital appreciation.