You Deserve This Dividend Windfall



Comments (3)

  1. gregreedan says:

    Even better are Convertible Preferreds, because, although they have a slightly lower dividend yield, offer the possibility of higher eventual capital gains.

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  2. Kamran says:

    Hi Karim
    nice article. One question:
    are there any preferred stocks that you can write call options against?

    Thanks
    Kamran

    [Reply]

  3. Jennifer says:

    approx. 1 million doralls$850 00 invested in 10 year laddered corporate/provincial bondscurrent avg. yield=4.7%=$39 950$150 000 invested in dividend-enhanced tax credit paying securitiescurrent avg. yield= 7.5%=$11 250total earnings=$51 200 – (avg. tax rate of 15.1%= $7 746)= $43 454not much difference in actual cash returned to you after tax, completely different exposure to risk and capital loss. as 85% of your capital is promised to be returned. It’s also completely possible to build and keep the fixed-income portfolio in an RRSP during employed years.when you are retired and hoping to live off about 40-50 thousand a year, your income will no longer be in an upper-income tax bracket. therefore the need to take on excessive tax-incentive based investments is unnecessary to achieve ‘head-spinning’ yield. less tax and lots of money, not bad for a millionaire.IMO it’s easy to believe that equities provide the optimal form of return on capital and growth. It’s harder to not be greedy, to focus first and primarily on capital preservation and be willing to accept less upside. I suppose it’s what works best for the individual investor, but if I work hard and retire with 945 000 doralls I’d sure like to know that half (or all) of it can’t randomly evaporate.you are absolutely correct that dividends makes sense for those currently employed and earning a salary that puts them in a higher tax-bracket. preferred shares are a relatively secure way to achieve some extra tax relief while working away the hours.bank preferred shares yield about 6.5% now.

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