Romina Maurino of the Canadian Press was kind enough to quote me in her story Preferred company shares can provide steady income, tax benefits:
James Hymas, president of Hymas Investment Management in Toronto, said preferred shares, which have taken a hit as investors speculate about what the U.S. Federal Reserve will do about its tapering program, are currently more attractive relative to bonds than they have been since the credit crunch.
“I believe that people will be nibbling away at the preferred shares market,” Hymas said. “No taxable investor should own more than a bare minimum of long-term corporate bonds because preferred shares are much more attractive than long-term corporate bonds at this point.”
Update: No sooner are the words out of my mouth than TCA.PR.X is called for redemption; this issue carries a 5.6% coupon, and that’s a dividend! On September 9 – that is to say, four days ago – TCA issued a preliminary prospectus for $300-million in 4.55% 28-year debentures priced at 99.521.
Today’s skill testing question is: would you borrow at 4.55% interest to earn 5.6% dividend?