Supplemental Dividend
Plain-English definition
A supplemental dividend is an additional distribution paid alongside or beyond a company's regular dividend. The label describes the payment, but not whether it will recur or what economic source funded it.
Why it matters
Some BDCs use supplemental dividends to distribute earnings above the regular dividend while keeping the regular payout at a different level. Investors should distinguish recurring supplemental payments from irregular or special distributions.
Example
A BDC might pay a $0.40 regular quarterly dividend and a $0.05 supplemental dividend. Whether the supplemental belongs in an annual coverage denominator depends on whether it is paid regularly, not merely on its name.
How income investors use it
Review the declaration history, stated policy, earnings source, taxable-income considerations, and payment frequency. Do not automatically annualize a new or irregular supplemental payment.
Fly High perspective
Fly High includes the regular dividend and supplemental dividends paid regularly in annualized included dividends. It excludes irregular and unpredictable special dividends. The company's label alone does not determine inclusion.
This material is general education, not individualized investment, tax, or legal advice.