Alternative Investment Trust Returns 100% Capital in Special Dividend

Special Dividend Announcement

Alternative Investment Trust (ASX: AIQ) has declared a special dividend of AUD 0.04186 per ordinary unit, scheduled for payment on 20 February 2025. This distribution is notable for being a 100% return of capital, rather than a typical income dividend, signaling a direct return of invested funds to unit holders.

Distribution Details and Timing

The ex-dividend date is set for 24 January 2025, with the record date following on 28 January 2025. Investors holding units as of the record date will be eligible for the payment. The dividend is unfranked, meaning it carries no Australian franking credits, which may have tax implications depending on individual investor circumstances.

Implications of a Return of Capital

A return of capital distribution typically reflects a return of some or all of the original investment rather than earnings generated by the trust. This can occur for various reasons, including asset sales or restructuring within the trust. While it provides immediate cash flow to investors, it also reduces the cost base of their investment, potentially impacting future capital gains tax calculations.

Dividend Reinvestment Plan Status

Although Alternative Investment Trust maintains a Dividend Reinvestment Plan (DRP), this special dividend is not eligible for participation in the DRP. Investors seeking to reinvest their distributions will need to consider alternative options.

Market and Investor Considerations

This special dividend announcement may be interpreted as a positive signal of the trust’s liquidity and willingness to return value to investors. However, the unfranked nature and return of capital status warrant careful consideration by investors regarding tax treatment and the trust’s ongoing capital structure.