There’s one big reason why investors should be bullish on George Weston Limited (TSX:WN).

The company trades at a nice discount to the sum of its parts. It owns 46% of Loblaw Companies Limited, Canada’s largest grocer, and is also the new parent company of Shoppers Drug Mart, Canada’s largest pharmacy chain. Loblaw also owns an 82% interest in Choice Properties Real Est Investment Trust, meaning George Weston indirectly owns nearly 38% of that REIT. George Weston also owns a bakery that does $2 billion in annual revenue, along with an operating profit of $250 million or so.

If you add up the sum of the parts, essentially investors are getting George Weston’s bakery business for free, plus full exposure to the success of Loblaw, which is doing a nice job competing against Canada’s other retailers. That’s not a bad combination, especially in a market many observers agree is getting a little frothy.

But like with many stocks, George Weston pays a bit of an anemic dividend. Shares yield just 1.7%, which isn’t very satisfying for most income investors. There are dozens of better income choices in the market, some even in the same sector.

I think I have a solution.

Prefer the preferred shares

In the past few years, George Weston has done a nice job raising the dividend of its common shares. The quarterly dividend has risen from $0.32 per share in 2010 to $0.425 starting in July.

That’s decent dividend growth, but it’s not really helpful for an investor looking for income now. The better solution for that investor is the preferred shares, which currently yields an eye-popping 5.7%.

Yes, the preferred-share investor won’t get any dividend increases since the payout is fixed. And they also won’t participate in any gains in the stock price since preferred shares tend to trade alongside bonds and interest rate expectations.

But from an income perspective, loading up on George Weston preferred shares makes loads of sense. Let’s look at the total income an investor in the common shares and the series I preferred shares (ticker symbol WN.PR.A) would be looking at in the next five years, based on a $10,000 investment and assuming 5% growth annually for the common share dividend.

Year Common Preferred
1 $180 $570
2 $369 $1,140
3 $567 $1,710
4 $775 $2,280
5 $994 $2,850

As you can see, the choice is pretty obvious for someone who needs income now.

In fact, if you assume 5% dividend growth on the common shares, it’ll take 25 years for the amount of annual income generated by the common to equal the dividends paid out by the preferred shares, and that’s not even factoring in all the additional dividends accumulated over the years.

That’s a tolerable wait if you’re in your 30s and want an income stream for retirement, but isn’t so nice if you’re looking for income now.

These preferred shares have a nice feature as well. Unlike many others issued in the past few years, they pay a consistent dividend. Many competing preferred shares reset every five years, which can have an adverse effect on income.

The other advantage is that preferred shares are likely to act as a nice hedge when the market declines. Investors will rush out of stocks and into assets they deem to be more secure. Preferred shares of solid companies like George Weston should do well in that scenario.

If you’re an investor looking for consistent dividends and some protection of your capital, preferred shares are a good option. The George Weston preferred shares offer a particularly nice combination of security and yield, which is what every income investor looks for. That’s why I own them in my fixed-income portfolio.

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Fool contributor Nelson Smith owns George Weston preferred shares.