What will be the new preferred share dividend rate for the extended term and how does it compare to current market yields for similar securities?

New preferred‑share dividend rate

The Fund’s press release says the preferred‑share dividend for the extended 5‑year term (June 2026 → June 2031) will be set “at least 60 days before the current June 30 2026 maturity date” and will be calibrated to market yields for preferred securities with comparable terms. While the exact rate has not yet been disclosed, the language implies that the board will price the dividend so that the resulting yield is in line with what investors can earn on similar‑dated preferreds in the market at that time.

How it stacks up against today’s comparable yields

• Current GDV Class A distribution: 10.7 % (based on the Aug 11 2025 closing price).
  
• Toronto‑market preferreds with 5‑year horizons: most senior‑secured preferreds on the TSX are trading in the 8‑9 % yield band; high‑yield, lower‑credit preferreds can reach 9‑10 % but are priced at steeper discount levels and carry higher credit‑risk premiums.
  
• U.S. and global preferreds with similar maturity: comparable U.S. corporate preferreds are yielding 7.5‑8.5 %, while “preferred‑share ETFs” that aggregate a mix of 5‑year issues sit around 8 %.

Given that the Fund’s Class A distribution is already above 10 %, the likely preferred‑share dividend will be set at a yield modestly lower than the Class A rate—probably in the high‑8 % to low‑9 % range—to stay competitive with the broader preferred market while still offering a premium to the “high‑yield” segment of the TSX.

Trading implications

• Short‑term: Until the dividend is announced, the preferreds will trade on expectations of a high‑8 %‑low‑9 % yield. If the market prices the preferreds at a yield significantly above this (e.g., >10 %), a correction is likely as the board’s “market‑based” pricing will pull the rate down.
  
• Long‑term: The extension removes the 2026 redemption pressure, allowing the preferreds to continue delivering a stable, above‑average yield relative to peers. For yield‑seeking investors, the GDV preferreds become a attractive alternative to other TSX preferreds that are capped near 8 %, especially in a low‑interest‑rate environment.
  
• Action: Consider building a position in GDV preferreds now if the current price reflects a yield above 9 % (i.e., a discount to the expected market‑based rate). Conversely, if the yield is already compressed near 8 %, hold off until the dividend announcement to avoid overpaying for a premium that may be trimmed to align with market levels.