Topic: How To Invest

Mr. McKeough: Could you give me your comments on Big Bank Big Oil Split Corp.? Thanks.

Article Excerpt

Big Bank Big Oil Split Corp. is a split-share company with two types of stock: capital shares ($9.32, symbol BBO on Toronto) and preferred shares ($10.21, symbol BBO.PR.A on Toronto). The company holds shares of the biggest six Canadian banks, plus 10 large Canadian oil and gas and pipeline companies. Split-share companies typically issue two classes of shares. Usually the capital shares get all or most of the capital gains and losses, as well as variable dividend income, and the preferred shares get a fixed amount of dividend income. In the case of Big Bank Big Oil Split, the capital shares receive a monthly dividend of $0.05 a share ($0.60 annually), which gives them a 6.4% yield. The monthly dividend has been as high at $0.09, most recently in 2010. The dividend income the company gets from its portfolio isn’t enough to pay capital and preferred share dividends and management…