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What happened

Shares in the Brookfield Real Assets Income Fund (NYSE: RA) were down by a whopping 20% as of midday Wednesday. The plunge was triggered by the board of directors declaring that the fund was slashing its monthly distribution. The previous monthly payout of $0.199 per share will be repeated in September, but from October onward, it will drop to $0.118 per share — a nearly 41% cut.

Image source: Getty Images.

So what

The new monthly distribution annualizes to $1.416 per share and puts the stock on a theoretical dividend yield of 10.5%. In addition, the fund’s net asset value (NAV) per share stood at $14.84 at the end of June compared to a stock price of $13.44 at the time of this writing.

Now what

As tempting as it may be to argue that the stock is a good value — based on its dividend and discount to NAV — potential investors should consider a couple of things.

First, as you can see from this table, the company’s dividend of $2.39 wasn’t fully paid out of net investment income for the last six years. Instead, the fund was making a relatively high proportion of its return of capital distributions from NAV.








Net asset value per share







Net investment income per share







Distribution from net investment income per share







Return of capital distribution per share







Total distribution per share







Data source: Company presentations.

Note that the fund’s net asset value per share was $14.84 in June, a significant decline from its $20.12 at the end of 2022 — probably reflective of extremely tough conditions for the commercial real estate debt market. As such, don’t be surprised if even the now-lower dividend proves unsustainable over time, nor if the fund’s NAV continues to decline.

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Lee Samaha has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

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