
| The Yield Hunter |
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| Trust Preferred Shares -- Page 3 Trust preferred shares are shares issued by a trust which a corporation forms exclusively to purchase subordinated debt of the corporation. It generally works like this---the trust issues shares of preferred stock. From the proceeds of the sale the trust purchases a debt issue from the forming corporation. The corporation thus pays the trust interest payments which are passed onto you. Thus one level of taxation is eliminated (the corporate taxes). The payments are not eligible for the 15% tax rate. Most of the issues are $25.00 issues and generally are callable at $25.00 5 years from the date of issue. Dividends are paid quarterly on most of these issues. Most of the issues allow for deferrals of interest payments--yet in most instances the interest due continues to accumulate. Below are issues traded on the New York Stock Exchange |