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Brookfield Renewable Partners L.P. (BEP.UN)
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Brookfield Renewable Corporation Class A Exchangeable Subordinate Voting Shares (BEPC)
Q: I just bought BEP.UN in a non-registered account,shall the dividends be " fully taxed" ( equivalent to interest), if not how precisely will they be taxed ? Should I then switch for BEPC ? Thanks..
5i Research Answer:
Tax characteristics vary each year, but BEP.UN estimates that 50% to 75% of its distribution will consist of ordinary dividends, 0% to 5% return of capital and 20% to 50% as foreign dividends. It does not expect any withholding taxes to Canadian investors. BEPC, meanwhile, expects 90% to 100% of its dividend to be eligible dividends. Thus, it depends on one's tax rate. BEPC is trading at a 6.8% premium, reflecting the better tax treatment. If one has a taxable gain, a switch would take many years in order to offset the taxes. Meanwhile, BEP.UN offers a higher yield due to its lower price. We would be fine with the status quo, but new money could go to BEPC.