Quadravest has announced:
Dividend 15 Split Corp. II (the “Company”) is pleased to announce it will extend the termination date of the Company a further five year period from December 1, 2024 to December 1, 2029.
The term extension allows holders of DF Class A Shares (“Class A Shares”) to continue to receive ongoing leveraged exposure to a portfolio consisting of high-quality Canadian dividend yielding stocks as well as receiving targeted monthly distributions. Since inception of the Company Class A shareholders have received monthly distributions totaling $14.70 per share.
Holders of the DF.PR.A Preferred Shares (“Preferred Shares”) are expected to continue to benefit from cumulative preferential monthly distributions. The Preferred shareholders have received a total of $9.29 per share since inception.
The extension of the term of the Company is not expected to be a taxable event and should enable shareholders to defer potential capital gains tax liability that would have otherwise been realized on the redemption of the Class A Shares or Preferred Shares at the end of the term, until such time as such shares are disposed of by shareholders.
In connection with the extension, the Company will have the right to amend the rate of cumulative preferential monthly dividends to be paid to the Preferred Shares for the five year renewal period, commencing December 1, 2024. Any change to the Preferred Share dividend rate for the extended term will be based on market yields for preferred shares with similar terms at such time and will be announced no later than September 30, 2024
In connection with the term extension, the Company will offer a non-concurrent Special Retraction Right which will allow existing shareholders to tender one or both classes of Shares and receive a retraction price based on the November 29, 2024 net asset value per unit.
The Company invests in a high quality portfolio of leading Canadian dividend-yielding stocks as follows: Bank of Montreal, Bank of Nova Scotia, Canadian Imperial Bank of Commerce, Royal Bank of Canada, TorontoDominion Bank, National Bank of Canada, CI Financial Corp., BCE Inc., Manulife Financial, Enbridge, Sun Life Financial, TELUS Corporation, Thomson Reuters Corporation, TransAlta Corporation, TC Energy Corp.
Thanks to Assiduous Reader niagara for bringing this to my attention!
In line with other announcements from Quadravest written about on this blog yesterday, the rate for DF.PR.A has been increased to 7.0% for the next 5 year term commencing Dec. 31, 2024. The rate was 5.75%, which was .25% above the old rate for DFN.PR.A, but Quadravest has now made then equal at 7.0%. As of Aug. 30, 2024 the NAV for DF was $15.78 versus $15.75 for DFN. Quadravest has done well to bring DF back to level with DFN. In the recent past the NAV of DF was significantly below the NAV of DFN.
https://www.quadravest.com/_files/ugd/78f11d_024c8c1950994b38beff52e9f1af70a2.pdf
I have noticed that convergence on the NAVs between DFN and DF as well. Since the two funds hold the same 15 stocks (potentially, anyway), one wonders how they were managed differently and why they were not managed exactly the same way.
one wonders how they were managed differently and why they were not managed exactly the same way.
Looking at the Distributions tab on both funds for payments marked as occuring in 2023 & 2024, one finds that DFN has had Capital Unit distributions totalling $1.50 for the period; the comparable figure for DF is $0.40.
The difference on preferred dividends went the other way, but only by a total of about $0.04 per unit, so call it 0.
Looking at my notes for PrefLetter for January 2023, I see that DFN had an NAVPU of 15.45 on 2022-12-30; the value for DF was $14.05.
So an initial difference of $1.40 in NAVPU, offset by a distribution difference of $1.10. That’s a good chunk. Sequence of Returns risk might make up a little bit more, particularly since the fund’s won’t have paid Capital Unit dividends at the fund’s lows, i.e., they will be paid only after a sufficent run-up ( I will leave calculation of the precise size of this effect as an exercise for the student). I say the moral of the story is: NAV Tests Work!
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