Terms

Series

Series G Cumulative Preferred Stock

Liquidation Preference

$25.00

Coupon Rate

5%

Rate Type

Fixed

Annual Dividend

$1.25

Payment Frequency

Quarterly

Cumulative

Yes

Perpetual

Yes

Convertible

No

Callable

Yes

First Call Date

July 24, 2017

First Call Price

$25.00

Capital Stack Ranking

Junior To: Any Indebtedness Incurred By The Fund; Pari Passu With: Series C Auction Rate Cumulative Preferred Stock, Series D Cumulative Preferred Stock, Series E Auction Rate Cumulative Preferred Stock, Series F Cumulative Preferred Stock; Senior To: Common Stock

Regulatory (Basel III) Call

Yes

Tax Classification

Other

Qualifies for QDI

No

Qualifies for DRD

No

Shares Offered

5,850,402

Prospectus Summary

The Gabelli Equity Trust Inc. is offering 5,850,402 shares of its Series G Cumulative Preferred Stock through a rights offering to existing Series F Preferred shareholders, priced at a $25.00 liquidation preference per share. The dividend rate is fixed at 6.00% per annum for the first twelve months post-issuance, then steps down permanently to 5.00% per annum (payable quarterly on March 26, June 26, September 26, and December 26), with the first payment commencing September 26, 2012. The Series G is cumulative, meaning any dividends the Board chooses not to declare accumulate as arrears that must be paid in full before any distributions can be made on common stock. The Series G Preferred sits above the Fund's common stock in the capital stack but ranks pari passu with the existing Series C, D, E, and F preferred series, and junior to all indebtedness the Fund may incur. The Fund is a closed-end investment company rather than a bank, so there is no bank subsidiary structural subordination. There are two notable call triggers before the five-year non-call period expires: first, the Board may redeem Series G Preferred at any time prior to the call date if necessary to preserve the Fund's regulated investment company (RIC) status under the IRS Code; second, a decline in portfolio value that causes asset coverage to fall below the 1940 Act's 200% minimum can compel the Fund to redeem shares. These regulatory redemption rights represent meaningful reinvestment risk for investors. At the $25.00 subscription price, the effective yield is 6.00% in year one, declining to 5.00% thereafter (a permanent step-down). The quarterly record date is set five business days before each payment date. If full cumulative dividends on any parity preferred series are in arrears, all preferred dividends are paid pro rata; additionally, no common stock distributions may be declared unless preferred asset coverage is at least 200%. The Series G Preferred is unrated. The prospectus supplement does not explicitly confirm qualified dividend income (QDI) or dividends-received deduction (DRD) eligibility, directing investors to the full Prospectus and SAI for tax characterization — investors in closed-end equity funds should anticipate potentially mixed ordinary/capital gain dividend treatment depending on the Fund's underlying portfolio income.

Summarized from the SEC prospectus filing.

Distribution History

Ranking vs. Other Preferreds

Dividend Stopper Provisions

Dividend Stopper Description

The Fund cannot pay dividends or make distributions on its common stock unless all outstanding preferred stock (including the Series G) maintains at least 200% asset coverage; if cumulative dividends on any parity preferred series are in arrears, dividends on all preferred series are paid pro rata.

Div Score Breakdown

Reinvesty's multi-factor safety analysis for this preferred, composite score: 81 (Very Strong)