Unlocking Reliable Income with Brompton Funds: A Deep Dive into Preferred Shares and DRIP Strategies

Brompton Funds' upcoming July 2025 distributions highlight a compelling opportunity for income-focused investors. With consistent quarterly payouts, attractive yields on preferred shares, and the compounding power of reinvested distributions, these funds offer a structured path to long-term growth. But time is short: the June 30 record date looms, and investors must act swiftly to secure their place in this strategy.

The Case for Preferred Shares: Safety and Yield

Brompton's preferred shares, such as SBC.PR.A (Brompton Split Banc Corp.), stand out for their 6.4% annualized yield, far exceeding traditional fixed-income alternatives. These securities rank above common shares in priority for dividends and assets, making them a safer bet in volatile markets.

Take SBC.PR.A, which invests in Canada's “Big Six” banks (Royal Bank, TD, etc.), offering exposure to stable, dividend-paying institutions. The fund's low management fee of just 0.4% ensures more of your returns stay in your pocket.

The Power of DRIP: Compounding Growth Simplified

Brompton's Distribution Reinvestment Plan (DRIP) turns passive income into active growth. By automatically reinvesting distributions commission-free, investors can accelerate compounding. For example, a $10,000 investment in KNGC (Brompton Canadian Cash Flow Kings ETF) would generate over $74 in quarterly distributions—reinvested, this creates a snowball effect.

DRIP's benefits are clear, but timing is critical: To participate in the July 15 distribution, investors must be enrolled by the June 30 record date. Missing this deadline means waiting until October to reinvest future distributions.

Diversification: More Than Just Banks

While SBC.PR.A's banking focus is a cornerstone, Brompton's portfolio spans sectors. GDV.PR.A (Global Dividend Growth Split Corp.) invests in multinational firms like Microsoft and Unilever, while PWI.PR.A (Sustainable Power & Infrastructure) targets renewable energy and utilities. This diversification reduces reliance on any single industry, shielding investors from sector-specific downturns.

The Wellington Square AAA CLO ETF (BAAA), with its 75% allocation to AAA-rated collateralized loan obligations, adds another layer of stability. Its June 30 record date aligns with the broader distribution cycle, offering income seekers a fixed-income alternative with a 0.4% management fee.

Risks and Considerations

No investment is risk-free. Brompton funds trade on the Toronto Stock Exchange (TSX), where prices can fluctuate, sometimes at a discount to net asset value (NAV). Investors should also review fund-specific risks, such as interest rate sensitivity for preferred shares.

However, Brompton's track record of consistent distributions—including 32 consecutive quarterly payouts since 2020—suggests reliability. The funds' low fees and diversified portfolios further mitigate downside risk.

The Bottom Line: Act Before June 30

For income investors, Brompton Funds' July distributions are a no-brainer. Preferred shares like SBC.PR.A deliver secure yields, while DRIP enrollment unlocks compounding power. With the record date just days away, procrastination could mean missing out on months of growth.

Action Items:
1. Enroll in DRIP by June 30 to reinvest the July 15 distribution.
2. Diversify with preferred shares like SBC.PR.A, GDV.PR.A, and PWI.PR.A.
3. Consider BAAA for fixed-income exposure with minimal fees.

In a low-yield world, Brompton Funds offer a disciplined path to steady income and growth. Don't let this opportunity slip away.

Data as of June 2025. Past performance does not guarantee future results. Always review fund prospectuses and consult with an advisor.