The Bank of Queensland Limited (ASX: BOQ) share price is on the rise today, up 1.22% at the time of writing to $7.88 a share.
Bank of Queensland shares are now up more than 25% over the past month alone, up more than 37% over the past 6 months, and up more than 70% since 14 May. The Bank of Queensland share price is also up 7.8% year to date.
So what's the latest from this ASX banking share?
Just before the market open this morning, we got a market announcement from Bank of Queensland regarding a dividend payment.
This dividend is scheduled to be paid on 15 February 2021, and will go ex-dividend on 28 January. It will be for the sum of 56.41 cents a share. That would translate into a hefty 7.85% dividend yield on the current BOQ share price – quite a haul, one might think. If this was a normal dividend. Which it is not.
BOQ dividend announced, but it's not for everyone
No, the dividend announced this morning is not one for ordinary shareholders. Bank of Queensland has already paid its final dividend for 2020, which was dished out last month on 25 November. That dividend was worth 12 cents a share (worth a yield of 1.53%, or 3.06% annualised on current pricing).
Instead, the announcement this morning was for a specific type of shareholder, specifically those owning "CAP NOTE 3-BBSW+3.80% PERP NON-CUM RED T-05-27".
In other words, those owning Bank of Queensland capital notes. Capital notes are a form of loan, or bond. They don't necessarily represent ownership of the company itself like an ordinary share does, although there are such things as 'convertible notes'.
In this way, these assets have a different risk profile and regulatory structure. Think of the payment announced today as interest for a loan, rather than a share of the company's profits, i.e. a normal dividend. That's why it appears to have such a large yield.
But these capital notes trade independently of the BOQ share price itself. This particular batch has the ticker symbol of 'BOQPF' and were issued just a few days ago on 30 November.
Bank of Queensland initiated this traunch of capital notes back in October in order to raise additional funds for the business. The bank was able to rake in $260 million from the program. The announcement today could be behind the Bank of Queensland share price's slight outperformance today. But this announcement was not entirely unexpected, so it's difficult to know for sure.
