{"id":16647,"date":"2011-10-12T17:13:08","date_gmt":"2011-10-12T21:13:08","guid":{"rendered":"http:\/\/www.prefblog.com\/?p=16647"},"modified":"2011-10-12T17:13:08","modified_gmt":"2011-10-12T21:13:08","slug":"bce-pr-t-to-reset-dividend-rate-to-3-393","status":"publish","type":"post","link":"https:\/\/prefblog.com\/?p=16647","title":{"rendered":"BCE.PR.T to Reset Dividend Rate to 3.393%"},"content":{"rendered":"

BCE Inc. has announced<\/a> (emphasis from original):<\/p>\n

BCE Inc. will, on November 1, 2011, continue to have Cumulative Redeemable First Preferred Shares, Series T outstanding if, following the end of the conversion period on October 18, 2011, BCE Inc. determines that at least one million Series T Preferred Shares would remain outstanding. In such a case, as of November 1, 2011, the Series T Preferred Shares will pay, on a quarterly basis, as and when declared by the Board of Directors of BCE Inc., a fixed cash dividend for the following five years that will be based on a fixed rate equal to the product of: (a) the yield to maturity compounded semi-annually (the \u201cGovernment of Canada Yield\u201d), computed on October 11, 2011 by two investment dealers appointed by BCE Inc., that would be carried by Government of Canada bonds with a 5-year maturity, multiplied by (b) the \u201cSelected Percentage Rate\u201d for such period.<\/p>\n

The \u201cSelected Percentage Rate\u201d determined by BCE Inc. for such period is 215%. The \u201cGovernment of Canada Yield\u201d is 1.578%. Accordingly, the annual dividend rate applicable to the Series T Preferred Shares for the five-year period beginning on November 1, 2011 will be 3.393%.<\/b><\/p><\/blockquote>\n

So it turned out higher than my September estimate of 3.12%<\/a>, due to the increase in the Five-Year Canada yield in the interim. The annual dividend will be 0.84825 commencing November 1, down dramatically from the issue rate of 1.1255<\/a>, which will probably cause some angst.<\/p>\n

As previously noted<\/a>, BCE’s deadline for conversion to and from BCE.PR.S, the RatchetRate half of this Strong Pair<\/a>, is October 18, so anybody seeking to switch had better get cracking. I recommend that investors hold, or convert to, BCE.PR.T<\/b>. While the chances of prime averaging more than 3.393% for the next five years are pretty good, it will be remembered that BCE.PR.S can only be relied on to pay 100% of prime for as long as the price remains below 25.00. If the price goes much above par, the percentage of prime paid will drop – which means total dividends may be less than what will be paid on BCE.PR.T even if prime averages, say, 4.00%.<\/p>\n","protected":false},"excerpt":{"rendered":"

BCE Inc. has announced (emphasis from original): BCE Inc. will, on November 1, 2011, continue to have Cumulative Redeemable First Preferred Shares, Series T outstanding if, following the end of the conversion period on October …<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[13],"tags":[],"class_list":["post-16647","post","type-post","status-publish","format-standard","hentry","category-issue-comments"],"_links":{"self":[{"href":"https:\/\/prefblog.com\/index.php?rest_route=\/wp\/v2\/posts\/16647","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/prefblog.com\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/prefblog.com\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/prefblog.com\/index.php?rest_route=\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/prefblog.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=16647"}],"version-history":[{"count":0,"href":"https:\/\/prefblog.com\/index.php?rest_route=\/wp\/v2\/posts\/16647\/revisions"}],"wp:attachment":[{"href":"https:\/\/prefblog.com\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=16647"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/prefblog.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=16647"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/prefblog.com\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=16647"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}