BMO Financial Group
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BMO Financial Group
BMO Bank of Montreal

BMO Bank of Montreal

March 07, 2012 09:00 ET

BMO Financial Tip of the Week: Unlock the Power of Preferred Shares

TORONTO, ONTARIO--(Marketwire - March 7, 2012) - As part of BMO Financial Group's ongoing commitment to financial literacy and 'Making Money Make Sense' for Canadians, BMO is releasing a financial tip every week in 2012.

BMO's Financial Tip of the Week:

Take advantage of the benefits of preferred shares

Preferred shares can be a solid investment choice, yet they remain a mystery to many.

Preferred shares are investment products that are a hybrid of equities and bonds. For investors seeking income, preferred shares offer guaranteed fixed dividends and the chance for modest equity growth, along with stable share prices and predictable distributions. They can also be ideal for those seeking income investments in today's low interest rate environment.

Since investors of preferred shares have priority over investors who hold common stock in the same company, dividends are paid out to preferred shareholders first. Although preferred shareholders do not have voting rights, they have an advantage over common shareholders in the event a company has to liquidate, as they will receive dividends first.

Preferred shares can be held inside or outside of a registered plan (such as a Registered Retirement Savings Plan). If held outside, investors can take advantage of the dividend income tax credit.

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