While we cannot 'prove' the reason, volatility has decline over the past 18 months or so, and this has likely resulted in lower call option premiums in the financial sector. 81% of the distribution is taxed as return of capital and the manager may have some discretion as well in managing distributions. The financial sector itself is up 56% in the past two years, and there has not been many dividend cuts and in fact the opposite has occurred at most financials. The 16.5c dividend has dropped about 2c in the past two years. We cannot really predict where it is going to go. It depends on volatility, options volume/pricing, dividends and the sector as well as the market in general. But the yield remains very high for those seeking tax-advantageous income. If this is in a non-reg account, we would consider the after-tax yield here versus other alternatives before moving on.
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