SCD LMP Capital and Income Fund Inc

LMP Capital and Income Fund Inc., which is listed on the New York Stock Exchange under the symbol "SCD," today announced a quarterly distribution of $0.1300 per common share payable March 26, 2010.

The distribution schedule appears below:

The Board of Directors of the Fund reaffirmed the Fund's current quarterly distribution rate of $0.1300 per share for calendar year 2010. In doing so the Board, on management’s recommendation, also revised the methodology it uses to determine the Fund’s distribution rate. The Fund, as of calendar 2009, had set its quarterly distribution rate based on a minimum percentage of the Fund’s net asset value per share as of the last day of the prior year. The Fund will now declare a set amount as a quarterly distribution rate for 2010. The Fund may make additional distributions as necessary to meet certain tax requirements.

Given the continued uncertainty in the economic environment and the dramatic declines in both dividend yields and credit spreads, Fund management is pleased to be able to keep the 2010 distribution rate consistent with that of 2009. Fund management believes this course of action is in the best interest of the Fund and its shareholders as it maintains the distribution level at a rate that the investment management believes can be reasonably generated in the current environment. As in 2009, the Fund’s distributions in 2010 are likely to continue to rely heavily on net investment income generated by the portfolio. Short-term and long-term capital gains and returns of capital are not likely to be a significant factor in the composition of the distributions.

During 2009, the Fund’s managers significantly reduced the portfolio allocation to equities that paid either no or low dividends and replaced them with securities that offered more attractive dividend profiles. In addition, the Fund’s managers emphasized investments in companies that they believe possessed sound or improving balance sheets, and strong free cash flows coupled with attractive business models. The Fund’s managers believe that these high-quality companies can be attractive candidates for long-term investment.

As the dividend yield on the equity allocation of the portfolio was being increased, significant changes were being made to the portfolio’s fixed income allocation. The Fund started the year with a large allocation to high yield bonds which appreciated significantly during the course of the year. Towards the end of the year, however, the allocation to fixed income securities was reduced, and the high yield allocation shifted towards investment grade securities. This had the effect of reducing the risk profile of the portfolio, but also reduced the investment income earned on the Fund’s fixed income allocation. The Fund’s managers will continue to assess the fixed income markets and may increase the allocation to this sector when they believe opportunities present themselves.

The Fund also continues to use a line of credit to enhance portfolio returns; this line of credit provides the Fund with the ability to moderate its use as market conditions and opportunities change. As of January 31, 2010, the Fund was utilizing $60 million of its $125 million line of credit. Moderating the use of the Fund’s line of credit reflects both the decision to lower the portfolio’s allocation to fixed income securities as well as the general desire to currently have a more conservative positioning. The Fund’s managers may look to increase the use of leverage when they believe it is prudent to do so.

The Fund undertook these, and other, actions with the intent of allowing the Fund to rebuild its asset base through the capital appreciation of the underlying investment portfolio. These efforts proved successful in 2009, as the Fund returned 29.52% based on net asset value and 42.02% based on market price for the calendar year.

Under the terms of the Fund's managed distribution policy, the Fund seeks to maintain a consistent quarterly distribution level that may be paid in part or in full from net investment income and realized capital gains, or a combination thereof. Shareholders should note, however, that if the Fund's aggregate net investment income and net realized capital gains are less than the amount of the quarterly distribution level, the difference will be distributed from the Fund's assets and will constitute a return of the shareholder's capital. A return of capital is not taxable as a dividend; rather it reduces a shareholder's tax basis in his or her shares of the Fund.

The Board of Directors may reduce the Fund's quarterly distribution rate in the future or terminate or suspend the managed distribution policy at any time. Any such reduction in the quarterly distribution rate, termination or suspension could have an adverse effect on the market price.

Based on the Fund's accounting records as of the date of this press release, the Fund estimates that approximately 100% of the cumulative fiscal year-to-date distributions through March 2010 are sourced from net investment income. The estimated components of each distribution will be provided to shareholders of record in a separate notice.

Please note that neither this press release nor the separate notice should be used for tax reporting purposes and that each is being provided to announce the amount and estimated source of the Fund's distributions that have been declared by the Board of Directors. In early 2011, after definitive information is available, the Fund will send shareholders a Form 1099-DIV, if applicable, specifying how the distributions paid by the Fund during the prior calendar year should be characterized for purposes of reporting the distributions on a shareholder's tax return (e.g., ordinary income, long-term capital gain or return of capital).

LMP Capital and Income Fund Inc. is a non-diversified, closed-end management investment company. Legg Mason Partners Fund Advisor, LLC, a wholly-owned subsidiary of Legg Mason, Inc., serves as the Fund's investment manager. The Fund is sub-advised by ClearBridge Advisors, LLC and Western Asset Management Company, affiliates of the investment manager.

Contact the Fund at 1-888-777-0102 for additional information, or consult the Fund’s web site at www.leggmason.com/cef.

All data and commentary provided within this press release is for informational purposes only. Legg Mason, Inc. and all of its affiliates do not engage in selling any of the shares of the Fund. The Fund’s common shares are traded on the New York Stock Exchange.

LMP Capital and Income (NYSE:SCD)
Historical Stock Chart
From Jun 2024 to Jul 2024

LMP Capital and Income (NYSE:SCD)
Historical Stock Chart
From Jul 2023 to Jul 2024