Tortoise Energy Infrastructure Corp. (TYG) merger could lead to 30% boost in distribution.

Tortoise Energy Infrastructure Corp. (TYG) is a closed-end fund that provides exposure to infrastructure, mainly with an energy focus in natural gas infrastructure. The fund's merger could deliver a 30% bump in the distribution. TYG is a closed-end fund that invests primarily in infrastructure, with a focus on energy, particularly natural gas infrastructure. The merger could result in a significant increase in the distribution. TYG is a closed-end fund that invests in infrastructure, with a focus on energy, particularly natural gas infrastructure. The merger could lead to a 30% increase in the distribution.

Tortoise Energy Infrastructure Corp. (TYG) is a closed-end fund that provides exposure to infrastructure, primarily with an energy focus in the natural gas infrastructure space. The fund has been performing strongly, and a recent merger with its smaller sister fund, Tortoise Sustainable and Social Impact Term Fund (NYSE: TEAF), could deliver an additional 30% bump in its distribution.

The merger, which has been approved by the board, is subject to shareholder approval. If approved, it will see the distribution increase once again. TYG has been on a strong run, providing more than double the total return compared to the S&P 500 Index since the last update. The fund's 1-year Z-score is 1.82, indicating strong performance relative to its peers.

The merger with TEAF could increase TYG's distribution from its current rate of 10.18% to approximately 13.54%. This increase would be driven by the larger asset base and potential for higher returns from TEAF's holdings. TYG's investment strategy focuses on generating high total returns with an emphasis on current distributions.

The fund's current discount is -5.45%, which has been narrowing over the past several years. The merger could further narrow this discount, although the potential upside is limited by the current discount contraction. TEAF's discount is similar to TYG's, indicating that the merger could provide a meaningful boost to TYG's distribution.

The merger could also have tax implications for TYG. The fund is structured as a Regulated Investment Company (RIC), which allows it to pass through income and capital gains to shareholders, avoiding double taxation. However, the fund has significant capital loss carryforwards that could expire in 2025, potentially impacting its future tax rate.

Overall, the merger with TEAF could provide a significant boost to TYG's distribution, although the fund's high operating expenses and leverage could limit its long-term growth potential. Investors should carefully consider the fund's risk profile and potential tax implications before making an investment decision.

References:
[1] https://seekingalpha.com/article/4815527-tyg-merger-could-deliver-another-30-percent-bump-in-distribution