THE SORRY TALE OF IN­VEST­MENTS IN PREF­ER­ENCE SHARES

Finweek English Edition - - Creating wealth -

SINCE APRIL LAST YEAR, just af­ter the div­i­dend for the pre­vi­ous six months had been paid, the price of PSG pref­er­ence shares fell from 108c to 88c. At the same time the prime-lend­ing rate in­creased by one per­cent­age point and the div­i­dend on PSG’s pref­er­ence shares rose ac­cord­ingly.

The ques­tion that the prospec­tive in­vestor should ask is whether that fall from 108c to 88c – which ef­fec­tively pushes the re­turn rate on those pref­er­ence shares up from 9% to 11% – doesn’t fully com­pen­sate the in­vestor for the un­cer­tainty con­cern­ing div­i­dend tax, or whether PSG will com­pen­sate the pref­er­ence share­hold­ers.

I have an in­vest­ment in PSG pref­er­ence shares, and I’m look­ing for an op­por­tu­nity to sup­ple­ment it.

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