Brompton Group has announced (critical part bolded):
– (TSX: DGS, DGS.PR.A) Dividend Growth Split Corp. (the “Fund”) announces that the preferred share (the “Preferred Shares”) distribution rate for the next term from September 28, 2024 to August 30, 2029 will be $0.675 per Preferred Share per annum (6.75% on the par value of $10.00) payable quarterly. This represents a pre-tax interest equivalent yield of 8.8% per annum.(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 continue enjoying preferential cash dividends until August 30, 2029. Over the past 10-year period to June 30, 2024, the Preferred Share has delivered a 5.5% per annum return(2). The Preferred Share has delivered consistent returns over various interest rate cycles and has outperformed the S&P/TSX Preferred Share Index over the past 10-year period by 3.2% per annum, with less volatility. (2)
Annual Compound Returns(2) 1-Year 3-Year 5-Year 10-Year Preferred Shares (TSX: DGS.PR.A) 5.6% 5.6% 5.6% 5.5% S&P/TSX Preferred Share Index 20.7% 1.1% 5.6% 2.3% In addition, the Fund intends to maintain the targeted monthly class A share (the “Class A Share”) distribution rate of at least $0.10 per Class A Share.(3) The Class A share has outperformed the S&P/TSX Composite Index (the “Composite Index) and the S&P/TSX Composite High Dividend Index (the “High Dividend Index) over the past 1, 3, 5 and 10-year periods.(2) Over the past 10-year period to June 30, 2024, the Class A Share has delivered a 10.7% per annum return, outperforming the High Dividend Index by 5% per annum and the Composite Index by 3.7% per annum. (2)
Annual Compound Returns(2) 1-Year 3-Year 5-Year 10-Year Class A Shares (TSX: DGS) 27.2% 14.2% 16.1% 10.7% S&P/TSX Composite Index 12.1% 6.0% 9.3% 7.0% S&P/TSX Composite High Dividend Index 6.6% 6.3% 8.7% 5.7% Since inception on December 3, 2007 to June 30, 2024, Class A shareholders have received cash distributions of $16.39 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, on an approximately equally-weighted basis, in a portfolio consisting primarily of equity securities of Canadian dividend growth companies. In addition, DGS may hold up to 20% of the total assets of the portfolio in global dividend growth companies for diversification and enhanced return potential.
In connection with the extension, shareholders who do not wish to continue their investment in the Fund, may retract their Preferred Shares or Class A Shares on September 27, 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 September 27, 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 August 30, 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 RAV4guy for bringing this to my attention!
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