Sentry Select has announced:
Diversified Preferred Share Trust (the “Trust”) (TSX:DPS.UN) announces a change to its quarterly distribution rate from $0.30 per unit to $0.25 per unit, effective with the fourth-quarter distribution, payable on January 13, 2012 to unitholders of record on December 30, 2011.
The fundamental reason for the change in the quarterly distribution rate is the significant downward movement in Canadian interest rates over the last several years. This low interest rate environment has resulted in a decline in the average yield of the Trust’s portfolio. Consequently, the Trust’s Board of Directors has deemed it reasonable to change the Trust’s distribution rate to a more sustainable level
DBRS has maintained its rating at STA-3:
DBRS has today confirmed the stability rating of STA-3 (high) on the retractable units (the Units) issued by Diversified Preferred Share Trust (the Trust).
Proceeds from the Trust’s offerings have been used to invest in a diversified portfolio (the Portfolio) of preferred shares and securities. The Portfolio is passively managed by Sentry Investment Inc. (the Administrator).
The current weighted average yield of the Portfolio is approximately 4.95%. The Trust has been making quarterly distributions to the Unitholders equal to $0.30 per unit, yielding 4.80% per annum on the unit issue price of $25. The amount of the distribution and the net asset value (NAV) of the Portfolio may vary in accordance with the credit profile of each of the Portfolio’s underlying securities, prevailing interest rates and rate change expectations, and any losses or gains on rebalancing the Portfolio. On September 26, 2011, the Trust announced a change in the quarterly distribution rate from $0.30 per unit to $0.25 per unit, effective with the fourth-quarter distribution, payable on January 13, 2012, to unitholders of record on December 30, 2011. The change in the dividend amount will remain as such until further guidance is provided by the Trust. The Trust’s net income can currently cover approximately 77% of the distributions paid out to the unitholders. The reduction in the distribution rate will be of benefit to the shortfall in portfolio income relative to the distribution paid out to the Trust’s unitholder. The distribution coverage would increase from 77% to 92% if the new distribution rate is applied. The rating of STA-3 (high) is considered sufficient based on the change in distribution rate and other factors such as asset composition, credit quality and diversification of the Trust’s Portfolio, among others.