RPU: A Steady Income Anchor in a Rising Rate World

As the Federal Reserve continues its tightening cycle, income-focused investors face a critical question: How to secure consistent, tax-efficient dividends without sacrificing safety? Enter the Purpose US Preferred Share Fund (RPU), which on June 19, 2025, reaffirmed its role as a resilient income generator with its June 2025 dividend declaration.

The June 2025 Dividend: Stability in Volatile Markets

RPU's June 2025 distribution of CAD $0.094 per unit underscores its reputation for monthly consistency. The ex-date of June 26, 2025, marks the cutoff for eligibility, with payouts set for July 3, 2025. This cadence provides predictable cash flow—a rare commodity in an environment where short-term interest rates are climbing.

What's more, the dividend is classified as an “eligible” Canadian dividend, offering preferential tax treatment under the Income Tax Act (Canada). For investors in higher tax brackets, this distinction can amplify after-tax returns.

Yield Advantage Over Peers

At CAD $0.094/unit, RPU's June 2025 distribution holds its own against competitors. Let's compare with key peers:

• Purpose Canadian Preferred Share Fund (RPS): CAD $0.095/unit
• iShares U.S. Preferred Stock ETF (PFF): ~6.3%-6.69% yield (as of May 2025)
• SPDR® ICE Preferred Securities ETF (PSK): 6.86% yield (June 13, 2025)

While RPS edges RPU slightly in distribution amount, RPU's focus on U.S. financials and defensive sectors—a strategic bet in a rising rate environment—gives it an edge.

Why U.S. Financials and Defensive Sectors Matter

Preferred shares are hybrid instruments, offering fixed-income characteristics with equity-like upside. RPU's portfolio targets U.S. issuers in financial services (e.g., banks, insurers) and utilities—sectors that typically thrive in stable, rate-sensitive environments.

As the Fed raises rates, financials benefit from widening net interest margins, while utilities, with their regulated cash flows, provide steady income. This dual focus positions RPU to outperform broader equity markets during volatility.

Ex-Date Strategy: Timing is Key

The June 26 ex-date creates a critical window for investors. To qualify for the June dividend, shares must be purchased before this date. For those reallocating assets into income-generating vehicles, RPU's monthly distribution structure allows for efficient reinvestment or immediate cash flow.

Risks and Considerations

No investment is without risk. Preferred shares rank below senior debt in capital structure, and rising rates can pressure bond prices. However, RPU's monthly payouts and focus on investment-grade issuers mitigate this exposure.

Investment Takeaway: RPU for Income Seekers

In a rising rate environment, RPU's three pillars of appeal stand out:
1. Monthly consistency: Unparalleled for Canadian investors seeking predictable cash flow.
2. Yield advantage: Competitive with peers, with tax efficiency as a kicker.
3. Defensive exposure: U.S. financials and utilities provide a buffer against equity market swings.

For income-focused portfolios, RPU is a strategic anchor. Consider pairing it with shorter-duration bonds or dividend-paying stocks to balance risk.

Final Thought: As rates climb, RPU's blend of stability and yield makes it a standout option for investors prioritizing both income and safety. The June 26 ex-date is a clear entry point—act decisively to secure its predictable returns.