PFD and PFO Announce Reduced Regular Monthly Dividend Amounts
03 September 2008 - 10:57AM
Business Wire
The Boards of Directors of Flaherty & Crumrine Preferred Income
Fund Incorporated (NYSE:�PFD) and Flaherty & Crumrine Preferred
Income Opportunity Fund Incorporated (NYSE:PFO) have approved new
regular monthly dividend amounts on their common stock to be
effective with the dividends to be paid on September 30, 2008.
Until further notice, the new regular monthly dividend for PFD�s
common stock will be $0.073 per share, which equates to an annual
dividend of $0.876 per share, and the new regular monthly dividend
for PFO�s common stock will be $0.061 per share, which equates to
an annual dividend of $0.732 per share. Donald F. Crumrine,
Chairman of the Boards of the Funds, said, �We have reduced the
dividend primarily because of each Fund�s continued high leverage
expenses. Each Fund leverages the returns to common stock
shareholders through its Aa1/AAA rated preferred stock, which pays
dividends that reset every 49 days through an auction process.
Historically, the Funds� auction rates have been lower than other
highly-rated short-term money market instruments because the
distributions are tax-advantaged. In February, the ongoing credit
crunch caused the auction process to collapse. Since then, the
Funds have been paying maximum dividend rates to their preferred
shareholders and this added cost has eroded each Fund�s income.�
Mr. Crumrine continued, �Nonetheless, each Fund�s common stock
dividend continues to be enhanced by its use of leverage. Since
February, the Funds have sought alternative financing arrangements
for their leverage. With the greater flexibility provided by
changes approved in May by the Funds� shareholders, each Fund now
has the option of using borrowing or other debt financing as a
means of leverage and we have been actively pursuing such
solutions. However, at this time, we cannot predict when that will
occur, and, in the meantime, we have reduced the dividend because
each Fund has less net income to distribute to our common stock
shareholders.� PFD was organized in 1991 and PFO was organized in
1992 as closed-end, diversified investment companies which invest
primarily in preferred securities. Each Fund�s investment objective
for holders of its common stock is high current income consistent
with preservation of capital. PFD and PFO are managed by Flaherty
& Crumrine Incorporated, an independent investment adviser
which was founded in 1983 to specialize in the management of
portfolios of preferred and related securities. Flaherty &
Crumrine also manages two other U.S. closed-end funds: Flaherty
& Crumrine/Claymore Preferred Securities Income Fund (NYSE:
FFC); and Flaherty & Crumrine/Claymore Total Return Fund (NYSE:
FLC).
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