PrefBlog

Brompton Group has announced (on 2024-2-28):

that the distribution rate for the preferred shares (the “Preferred Shares”) for the 5-year term from April 30, 2024 to April 27, 2029 will be $0.70 per Preferred Share per annum (7.0% on the par value of $10.00) payable quarterly. This represents a pre-tax interest equivalent yield of approximately 9.1%.(1) The Preferred Share distribution rate is based on current market rates for preferred shares with similar terms.

The term extension offers preferred shareholders the opportunity to enjoy preferential cash dividends until April 27, 2029. Over the past 10-year period to January 31, 2024, the Preferred Share has delivered a 6.1% per annum return.(2) The Preferred Share has delivered consistent returns with less volatility and has outperformed the S&P/TSX Preferred Share Index over the past 10-year period by 4.2% per annum.(2)

Annual Compound Returns(2)	1-Year	3-Year	5-Year	10-Year
Preferred Shares (TSX: LCS.PR.A)	6.4%	6.4%	6.4%	6.1%
S&P/TSX Preferred Share Index	4.5%	2.2%	3.9%	1.9%

In addition, the Fund intends to maintain the targeted monthly class A share (the “Class A Share”) distribution rate at $0.075 per Class A Share.(3) The Class A Share has outperformed both the S&P/TSX Capped Financials Index and the S&P/TSX Composite Index over the past 1, 3, 5, and 10-year periods. (2) Over the past 10-year period to January 31, 2024, the Class A Share has delivered an 11.6% per annum return, outperforming the S&P/TSX Capped Financials Index and the S&P/TSX Composite Index (the “TSX Composite”) by 2.0% per annum and 4.0% per annum, respectively. (2)

Annual Compound Returns(2)	1-Year	3-Year	5-Year	10-Year
Class A Shares (TSX: LCS)	39.8%	32.4%	25.5%	11.6%
S&P/TSX Capped Financials Index	4.6%	12.1%	9.8%	9.6%
S&P/TSX Composite Index	4.7%	10.0%	9.6%	7.6%

Since inception on April 18, 2007 to January 31, 2024, Class A shareholders have received cash distributions of $8.36 per Class A Share. Class A shareholders have the option to benefit by reinvesting their cash distributions in a distribution reinvestment plan (“DRIP”) which is commission free to participants. Class A shareholders can enroll in the DRIP program by contacting their investment advisor.

The Fund invests in a portfolio of common shares of Canada’s four largest publicly-listed life insurance companies, on an approximately equal weight basis: Great-West Lifeco Inc., iA Financial Group, Manulife Financial Corporation and Sun Life Financial Inc.

In connection with the extension, shareholders who do not wish to continue their investment in the Fund, will be able to retract their Preferred Shares or Class A Shares on April 29, 2024 pursuant to a special retraction right and receive a retraction price that is calculated in the same way that such price would be calculated if the Fund were to terminate on April 29, 2024. Pursuant to this option, the retraction price may be less than the market price if the security is trading at a premium to net asset value. To exercise this retraction right, shareholders must provide notice to their investment dealer by March 28, 2024 at 5:00 p.m.(Toronto time). Alternatively, shareholders may sell their Preferred Shares and/or Class A Shares through their securities dealer for the market price at any time, potentially at a higher price than would be achieved through retraction, or shareholders may take no action and continue to hold their shares.

Thanks to Assiduous Reader niagara for bringing this to my attention!

This entry was posted on Thursday, February 29th, 2024 at 11:59 pm and is filed under Issue Comments. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.