Both constructs employ debt leverage to make their dividends or return on capital payouts attractive.
The return-of-capital payout is cash you can spend now without having to declare it as taxable income; it could increase your taxable gain when you sell the shares, but that might be much later or never.
After having their capital-payout plans blocked by the Fed last year, MetLife got rid of its banking business and Citigroup got rid of its chief executive.
Graham (2003) surveys tax research related to capital structure, payout policy, compensation strategy, risk management, and the form of organizations.
Note also, if you hold a bond fund you can expect a sizeable capital gain payout at year-end.
Think twice before buying a fund late in the year, before a possible large capital gains payout.
Janus Twenty's $495 million portion of the total Janus' year-to-date unrealized loss in Healtheon could be used to slash the capital gains payout.
The government's take from such things as capital gains, payouts from pension funds, and "sole proprietorships" (one-man companies) should increase by 28% this year, the CBO reckons.
"The capital gains payouts are in the single digits, which is pretty darn good.
"Despite the absence of evidence that earnings retention leads to sound capital allocations, the payout rate has been declining for years.
And at a time of economic weakness, using bank capital for investor payouts leaves the banks more exposed to shocks.
