Terms

Series

5.00% Series H 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

September 28, 2017

First Call Price

$25.00

Capital Stack Ranking

Junior To: Any Indebtedness Incurred By The Fund, Creditors Of The Fund; Pari Passu With: Series C Preferred Shares, Series D Preferred Shares, Series E Preferred Shares, Series F Preferred Shares, Series G Preferred Shares; Senior To: Common Stock, Any Stock Ranking Junior To Series H Preferred Shares As To Liquidation

Regulatory (Basel III) Call

Yes

Tax Classification

Other

Qualifies for QDI

Yes

Qualifies for DRD

No

Shares Offered

4,200,000

Prospectus Summary

The Gabelli Equity Trust Inc. (NYSE: GAB), a non-diversified closed-end management investment company managed by Gabelli Funds, LLC, is offering 4,200,000 shares of its 5.00% Series H Cumulative Preferred Stock at a liquidation preference of $25.00 per share, with proceeds primarily earmarked to redeem the outstanding 6.20% Series F Preferred Shares. The Series H shares are callable at the Fund's option beginning September 28, 2017, at $25.00 plus accrued dividends. Critically, these shares are cumulative — meaning any dividend that is not declared or paid accumulates and must be paid in full before any dividend can be paid on the Fund's common stock or any junior stock, providing meaningful protection against temporary income shortfalls. Series H Preferred Shares rank senior to the Fund's common stock and any junior securities with respect to both distributions and liquidation proceeds. They rank on a parity basis with the Fund's outstanding Series C, D, E, F, and G Preferred Shares. The shares are junior to all indebtedness of the Fund, though as a regulated investment company the Fund relies primarily on equity financing. Under the Investment Company Act of 1940, the Fund must maintain at least 200% asset coverage across all outstanding senior equity securities; failure to cure an asset coverage shortfall triggers a mandatory redemption of a sufficient number of preferred shares at $25.00 plus accrued dividends. Additionally, the Board may call the shares before the September 2017 optional redemption date if necessary to preserve the Fund's RIC tax status or satisfy rating agency requirements. At the $25.00 offering price, the Series H Preferred Shares yield 5.00% annually, or approximately $0.3125 per share per quarter, payable on March 26, June 26, September 26, and December 26, commencing December 26, 2012. The record date is the fifth preceding business day before each payment date. The Fund expects distributions to consist of a mix of long-term capital gains, qualified dividend income (QDI), and ordinary investment company taxable income; only the QDI and long-term capital gain portions qualify for preferential individual tax rates (15% at time of issuance), while the ordinary income portion is taxed at higher rates. Corporate holders should note that the dividends-received deduction (DRD) does not apply to distributions from a RIC. Dividends on Series H shares can be deferred if full cumulative dividends on all parity preferred series have not been paid, or if the Fund's asset coverage falls below the required 200% threshold.

Summarized from the SEC prospectus filing.

Distribution History

Ranking vs. Other Preferreds

Dividend Stopper Provisions

Dividend Stopper Description

If the Fund does not have at least 200% asset coverage under the 1940 Act, it cannot declare dividends on common stock; additionally, no full dividend can be paid on Series H Preferred Shares unless all parity preferred series are current on cumulative dividends.

Div Score Breakdown

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