Aimia's Preferred Shares: A Steady Beacon in Turbulent Markets

Investors seeking refuge in an era of economic uncertainty often turn to fixed-income securities, yet few instruments blend the stability of dividends with the defensive qualities of Aimia Inc.'s Series 3 preferred shares. Amid volatile markets, rising interest rates, and corporate turbulence, these securities have emerged as a paradoxical gem: a high-yielding, secure income stream anchored by contractual rigidity, even as Aimia navigates strategic shifts and quarterly losses. For income-focused investors, the Series 3 dividend—currently yielding 6.01% annually—represents a fortress of reliability in a shaky landscape.

The Structural Safeguards of Series 3 Preferred Shares

Aimia’s Series 3 preferred shares ($AIM.TO.PR.B) are structured to prioritize investor certainty. Key features include:
1. Cumulative Dividends: Unpaid dividends accumulate and must be settled before any distributions to common shareholders. This ensures that missed payments—should they occur—are not forgotten, even if Aimia faces temporary financial headwinds.
2. Fixed-Rate Stability Through 2029: The current 6.01% dividend rate, reset in March 2024 using the Government of Canada bond yield plus 4.20%, is locked in until March 2029. This removes near-term interest rate risk, a critical advantage as central banks globally remain in a tightening cycle.
3. Seniority Over Equity: In liquidation, these shares rank ahead of common stock, offering a shield against Aimia’s equity volatility.

Navigating Mixed Financials with Discipline

Critics may point to Aimia’s Q2 2024 net loss of $15.3 million or its recent board transition—where CEO Carol Wolf stepped down in April 2025—as reasons to avoid the stock. Yet these headwinds have not shaken the preferred dividend. Why?

• Dividend Covenants Take Precedence: Aimia’s credit agreements and shareholder agreements mandate that preferred dividends are paid first. Even during losses, the company has prioritized these obligations, as seen in the May 13, 2025, dividend declaration of $0.485813 per share—unchanged from prior quarters.
• Buyback Discipline Over Speculation: While Aimia’s common stock faces dilution risks, the company has refrained from issuing new preferred shares or diluting existing holders. Instead, recent buybacks of common equity signal a focus on capital efficiency, indirectly supporting the preferreds’ stability.

The Case for Defensive Income Play

In a market where 10-year government bonds yield just 4.1% and high-yield corporate bonds carry default risks, Aimia’s 6.01% preferred dividend stands out. The Series 3 shares offer:
- Tax Efficiency: Eligible dividends under Canadian tax law, boosting after-tax returns for residents.
- Call Risk Mitigation: Aimia’s decision not to redeem shares in March 2024 (despite the option) suggests confidence in maintaining the dividend structure. The next redemption date is 2029, extending the current yield’s lifespan.
- Downside Protection: With a par value of $25 per share, investors gain a clear floor should Aimia’s common stock falter.

Risks and the Calculus of Caution

No investment is risk-free. Aimia’s exposure to the travel and loyalty programs sector—its core business—remains vulnerable to macroeconomic slowdowns. A prolonged recession could strain its ability to fund dividends. However, three factors temper this concern:
1. Diversified Revenue Streams: Aimia’s loyalty programs (e.g., Air Miles) generate recurring revenue, even in downturns.
2. Debt Management: The company’s $4.2 billion in total debt is manageable, with no near-term maturities exceeding its liquidity buffer.
3. Institutional Support: Major institutional holders, including Canadian pension funds, continue to hold large stakes, signaling long-term confidence.

Conclusion: A Portfolio Anchor in Chaos

In an age of financial instability, Aimia’s Series 3 preferred shares offer a rare combination: a high yield, contractual safeguards, and a track record of resilience through corporate turbulence. For income investors, these securities are not just a dividend play—they are a bulwark against uncertainty. With the next dividend reset not due until 2029, and Aimia’s demonstrated discipline in preserving preferred payouts, now is the time to secure this fortress of stability before markets recognize its value.

Act now. Secure your slice of Aimia’s 6.01% fortress.