BOMBARDIER 6.25% PFD A: A Comprehensive Guide to Understanding This Investment Opportunity

Are you looking to diversify your investment portfolio? If so, you might want to consider Bombardier 6.25% PFD A. This investment instrument has gained significant attention in the financial market, and for good reasons. In this article, we will delve into what Bombardier 6.25% PFD A is, its features, and why it could be a valuable addition to your investment portfolio.

What is Bombardier 6.25% PFD A?

Bombardier 6.25% PFD A is a preferred share issued by Bombardier Inc., a well-known Canadian aerospace and transportation company. These preferred shares offer investors a fixed dividend rate of 6.25% per annum, which is paid quarterly. The "PFD" in the title stands for "Perpetual First Dividend," indicating that these shares are perpetual and have a higher claim on company earnings than common shares.

Key Features of Bombardier 6.25% PFD A

1. Fixed Dividend Rate: One of the primary attractions of Bombardier 6.25% PFD A is its fixed dividend rate. This means that investors can expect a consistent income stream, providing stability and predictability.

2. Perpetual Structure: As mentioned earlier, these preferred shares are perpetual, meaning that they do not have an expiration date. This feature ensures that investors can enjoy the fixed dividend payments indefinitely.

3. Higher Priority: Bombardier 6.25% PFD A has a higher claim on company earnings compared to common shares. This means that if the company faces financial difficulties, preferred shareholders will be paid before common shareholders.

4. Liquidation Preference: In the event of a bankruptcy or liquidation, preferred shareholders will be paid before common shareholders. This provides an additional layer of security for investors.

Why Consider Bombardier 6.25% PFD A?

1. Income Generation: The fixed dividend rate of 6.25% per annum makes Bombardier 6.25% PFD A an attractive investment for income-focused investors. This can be particularly beneficial for those looking to supplement their retirement income.

2. Stability: The perpetual structure and fixed dividend rate provide stability and predictability, which can be appealing during times of market volatility.

3. Dividend Growth: While the dividend rate is fixed, it is possible that Bombardier may increase the dividend in the future, providing additional value to investors.

Case Study: Bombardier 6.25% PFD A Investment

Let's consider a hypothetical scenario where an investor purchases 1,000 shares of Bombardier 6.25% PFD A at a price of 50 per share. This would result in an initial investment of 50,000.

With a fixed dividend rate of 6.25% per annum, the investor would receive a quarterly dividend payment of 156.25 (1,000 shares x 50 x 6.25%). Over the course of a year, the investor would receive a total dividend payment of $625.

Assuming the investor holds the shares for five years, they would have received a total of $3,125 in dividend payments, in addition to any potential capital gains if the share price increases.

In conclusion, Bombardier 6.25% PFD A is an investment opportunity that offers a fixed dividend rate, perpetual structure, and higher priority in earnings. For income-focused investors looking for stability and predictability, this could be a valuable addition to their portfolio.