Research : Retractible Preferreds and Bonds

The new edition of Canadian Moneysaver has been published, which means I can publicly release my column from the last one.

This article seeks to remind investors that the dividend tax credit is not the only factor to be examined when investing. When we look at retractible shares issued by operating companies, we find that the Yields-to-Worst available are not sufficiently high to be an easy choice over comparable corporate bonds, even after allowing for the effect of lower taxation rates on dividends.

Which is kind of a no-fun conclusion to draw for a preferred share specialist, but I wouldn’t want anybody to get angry with me after figuring it out for themselves!

Look for the research link!

One Response to “Research : Retractible Preferreds and Bonds”

  1. […] corporates as much as Canadas. PerpetualDiscounts now yield 5.85% as dividends, which (at the Ontario Interest-Equivalency Factor of 1.4x) provides the same after-tax income as interest of 8.18%. Long Corporate Bonds now yield a […]

Leave a Reply

You must be logged in to post a comment.