Toronto Dominion Bank Rate Reset Preferred Share (TSX: TD.PF.A)

Apparently, the market is confident that these shares will be redeemed at $25 on Oct. 31. If the bank chooses not to redeem the issue, then it will reset on Oct. 31 at the yield on the five-year Government of Canada bond on Oct. 1 plus a spread of 2.24%. If the five-year bond yield has declined by about 50 basis points from today’s level at that time to 2.85%, then the dividend would still increase substantially to $1.2725, for a yield of 5.2% on the current price. - Shawn Allen