Q: This preferred took a steep drop in June, came back a little and is now slowly drifting downwards. Pays a 10% div.
Why the big drop and why further downward momentum now? Is the div not safe? Is it that BCE common shares are just unloved currently? Reset issues?
Thanks,
Mark
Why the big drop and why further downward momentum now? Is the div not safe? Is it that BCE common shares are just unloved currently? Reset issues?
Thanks,
Mark
5i Research Answer:
BCE is selling assets and cutting costs, which is typically very good for preferred shares (less financial risk at the company). We would not have any concerns on the preferred dividend here. The move likely relates to interest rates. While the Bank of Canada has cut rates, market rates have still risen. Investors expected lower rates across the board, but market conditions has changed the yield curve somewhat, and dividend-stocks have been bouncing around because of this.