End Dividends, Special Dividend Declared
Toronto, October 21, 1998: Premium Income Corporation (the "Company") has declared quarterly dividends of $0.223526 on each of its Preferred shares and $0.40 on each of its Class A shares payable on October 30, 1998 to shareholders of record on that date. The Preferred Share dividend represents an annual yield of 5.75% on the original issue price of $15.00. The Class A Share distribution is comprised of a regular $0.20 distribution (an annual yield of 8% based on the original issue price of $10.00) plus a special distribution of $0.20. The purpose of the special dividend is to ensure that the Company distributes a sufficient amount of its net income and net realized capital gains for 1998 so that it will not be liable for income tax on such amounts. The amount of the special dividend may therefore be subject to minor adjustment.
The total distribution for Class A shareholders for the year ending October 31, 1998 should therefore be $1.30 per share (including special distributions during the year of $0.50) equivalent to a 13% annual distribution yield on the original issue price of $10.00.
Premium Income Corporation is a mutual fund corporation which invests in the common shares of Bank of Montreal, The Bank of Nova Scotia, Canadian Imperial Bank of Commerce, Royal Bank of Canada, and The Toronto-Dominion Bank. To generate additional returns above the dividend income earned on the Portfolio, the Company from time to time writes covered call options in respect to all or part of the common shares in the portfolio.
The Company's investment portfolio is managed by its investment manager, Mulvihill Capital Management Inc. The Company's Preferred and Class A shares are listed on The Toronto Stock Exchange and the Montreal Exchange under the symbols PIC.PR.A and PIC.A.