April was a very interesting month for CDx3 Investors.  Not only did they see more solid returns from the CDx3 Income Engine (see the Last Month's CDx3 Investor Results section below), but they had an opportunity to perform what Preferred Stock Investing refers to as an "upgrade."

Upgrade opportunities do not occur very often, but, as explained in the CDx3 Company Spotlight section below, it's great when they do.

There are two exciting developments this month that I wanted to share with you.  First, if you are a member of an investment group or club, there are now FREE educational materials regarding investing in preferred stocks available to you and your group.  If you're tired of reviewing the same old reports at every meeting, why not learn about something new and different?  The materials are FREE and only take a few minutes to review.

Secondly, I am slashing the retail price on CDx3 Special Reports to $4.95 each.  New, very exciting CDx3 products will be announced in the coming weeks and pricing adjustments of existing CDx3 products had to be made.  Check out the CDx3 Special Announcement section for details regarding the new investment group materials and the reduced retail prices of CDx3 Special Reports.

And for you bond owners, did you know that for two dividend periods during which you own a typical bond, your dividend income is less than the amount advertised with the bond?  This month's CDx3 Question Of The Month describes the difference between how dividends on bonds and CDx3 Preferred Stocks are calculated - financially speaking, the difference is substantial and one that you should know about.

From PerryS: 

The most obvious difference between the dividends paid to you on bonds versus those paid to you on CDx3 Preferred Stocks, is that the dividend rate paid to you on CDx3 Preferred Stocks is usually higher, depending on the type of bond.

But first, let me explain what a bond is.  Bonds are an IOU that you can purchase from either the government or from a private company.  When you purchase a corporate bond (usually for $1,000), you are loaning money to the issuing company.  In return, the issuer promises to pay you a dividend (like  interest on a bank CD), at a specified percentage rate.  The schedule of these bond dividend payments varies, but are usually paid every six months.

With all stocks and bonds that pay a dividend, including CDx3 Preferred Stocks, the issuing company is able to determine who the owners are (who to send the dividend cash to), but it still takes a bit of processing by a variety of organizations to get your periodic dividend payments to you.  There is a magic date, called the Ex-Dividend Date, that is used as the cut-off date.  Whoever owns a company's CDx3 Preferred Stock or bond on the Ex-Dividend Date each dividend period is the person who is going to receive the dividend payment for that period.

HOW BOND DIVIDENDS WORK:  For dividends from bonds, however, you may or may not get to keep all of the dividend money that is sent to you by the issuing company.  The best way to explain this is with an example.  Let's say I own a bond, and this bond pays its dividends every six months - on June 30 and again on December 31.  And let's say that after owning this bond for two months (January and February), I agree to sell it to you.  So, as of March 1, you own the bond.

On June 30, the issuing company pays the 6-month dividend to you.  However, before the money is actually posted to your brokerage cash account, your broker and my broker get together and perform a "post-sale reconciliation."  One-third of the dividend is transferred from your account to my account, since I had owned the bond for one-third of the 6-month dividend period.  You will see the remaining two-thirds show up in your account.

In other words, with bonds, you only get to keep the dividend income for the portion of the dividend period for which you were the owner.  This is true for both the dividend period during which you purchase the bond and for the dividend period during which you sell the bond.

So, for your first period of ownership and your last period of ownership, you will end up with a partial dividend.  With bonds, you do not get the entire dividend for these dividend periods; you get less, depending on how many days during these dividend periods you actually owned the bond.

HOW CDx3 PREFERRED STOCK DIVIDENDS WORK:  CDx3 Preferred Stocks cost about $25 per share and pay dividends every three months (quarterly).  When you receive the quarterly dividend payment for a CDx3 Preferred Stock, you get to keep it.  All of it.  No one cares about how many days during the dividend period (quarter) you owned it, versus how many days someone else owned it.  With CDx3 Preferred Stocks, there is no post-sale reconciliation.  You get to keep 100% of your dividend cash, whether you owned the CDx3 Preferred Stock for the entire dividend-quarter or just for a few days (which, as you may suspect, creates an incredible opportunity for those in the know - CDx3 Investors).

It is this fact that makes the market price of a CDx3 Preferred Stock rise as the end of the dividend-quarter approaches (by a predictable amount that is usually about equal to the amount of the upcoming dividend, of course).  This is what Preferred Stock Investing refers to as the Rule of Buyer/Seller Behavior and is an integral force that the CDx3 Income Engine takes full advantage of for CDx3 Investors.

So, with bonds, you only receive dividend income for the number of days that you own the bond; with CDx3 Preferred Stocks, if you own the preferred stock on the quarter's Ex-Dividend Date, you receive the entire quarter's dividend income, regardless of how many days you owned the preferred stock throughout the quarter.  And you get to keep all of it.

And that's how the dividends that you receive on CDx3 Preferred Stocks differs from those you receive on bonds.