Our primary investment objective is to provide our shareholders with a stable monthly dividend secured by our careful investments in mortgage loans that adhere to our disciplined underwriting policy. Our goal is to deliver the highest possible return with the lowest possible risk.
We achieve our investment objectives by demonstrating discipline in the details. We ensure our mortgage loans are made within communities where the stability and liquidity of real estate is high and to borrowers that represent an acceptable level of risk with a significant amount of equity to contribute; and we aggressively manage our portfolio. Stability and consistency to our shareholders is prioritized ahead of growing the size of the company.
As a Mortgage Investment Corporation, we focus primarily on residential mortgages under $500,000 secured in the first position and we distribute all of our earnings every year by way of a monthly dividend to our shareholders.
We declare and pay dividends monthly and target an annualized dividend of 7% to our shareholders net of fees. ThreePoint Capital delivered an annualized 7.08% to shareholders in 2017 and 7.17% in 2018. We offer the choice of monthly dividend payments or our dividend reinvestment program (DRIP) that allows shareholders to automatically reinvest their dividends in new shares of ThreePoint and enjoy the benefit of compounding interest.
Our monthly dividend is currently based on an annualized 6%, paid monthly, with a top-up dividend paid to each shareholder of record as at the last day of the fiscal year (December 31st) to match the actual yield earned by the company as determined by our Auditors (Grant Thornton).
Under Section 130.1 of the Income Tax Act, taxable dividends paid to shareholders are taxed as interest income. As a Mortgage Investment Corporation, we do not pay any income taxes, provided that we distribute all of our taxable income each year. In effect, we flow interest income that we earn on our investments in mortgages through to our shareholders.
Our shares are qualified investments for deferred income plans including registered retirement savings plans (“RRSPs”), registered retirement income funds (“RRIFs”), tax-free savings accounts (“TFSAs”) and registered education savings plans (“RESPs”).
We qualify as a MIC and are restricted from any activity that would result in us failing to qualify as a MIC. To qualify as a MIC, we must satisfy the requirements in subsection 130.1(6) of the Income Tax Act throughout the taxation year. Our only undertaking can be the investing of our funds; we are not permitted to manage or develop real property.
BOARD OF DIRECTORS
Our Board of Directors is comprised of six individuals, only one of which is also a member of senior management. Five of the six board members are independent of management with extensive experience in real estate, negotiation and law. Any mortgage request exceeding $750,000 in size or total exposure and 65% loan-to-value requires approval by the Board. The Board acknowledges responsibility for the stewardship of ThreePoint Capital Corp. on behalf of the shareholders that have elected them.