Dividends are in the account.Life is good.
My wife and I received $4,201.31 dividends yesterday for our 9,900 BPO.PR.T.
Now let us take a few minutes and compare what life would be like if we had BPO.PR.A instead.
For the year 2024;
BPO.PR.A $0.294375 x 4 x 9,900 = $11,657.25
BPO.PR.T $0.424375 x 4 x 9,900 = $16,805.25
Net benefit holding T over A for year 2024 = $5,148.00
That is money in our pockets ("bird in our hands")
Now the "A" will reset at the end of this year with the new dividend rate applicable at the end of March 2025.
To estimate the eventual dividend one must make some projections since we do not know what the Canada 5 year bond rate will be on December 1st 2024.
What is generally understood and agreed upon in the investment community is that interest rates will be going down later this year. The current rate of 3.52% is slightly less than the December 1st 2023 rate when the "T" were reset. I expect and project Canada 5 year bond rate will go down with other interest rates by year end to around 3.00%/3.25%.
To be on the safe and conservative side of things I will use 3.00% as a base of the reset of "A" meaning 6.15% (3.00 + 3.15). This would bring a new dividend annual rate of $1.5375.
Based on our holdings of 9,900 shares that would be $15,221,25 (still $1,584.00 less than the "T"),
Now let's add up 5 years of differences in the dividends received
2024 $5,148.00
2025 $1,584.00
2026 $1,584.00
2027 $1,584.00
2028 $1,584.00
Total $11,484.00
Now there could possibly be an increase in the value of the "A" in relation to the "T" after reset. However, considering the "A" would pay about 10% less dividend for the following four years it is hard to imagine their share value would appreciate above the "T".
Now, those projections may change if and when
1) the spread between the share price of A and T grows to $2.50/$3.00 over the next month or two as I expect
2) forecast for lower interest rates change over the next six months