Investment Q&A

Q: I have owned a few perpetual preferreds for quite a few years. Now that interest rates are going up, some of them (particularly the ones with Canadian Utilities) have been declining. I should have sold them earlier this year but did not. What do you think perpetual preferreds will do in the coming year?

Q: Hi,
TD has just issued an offer for convertible debentures on AFN, and I'd be interested in your opinion of it. The shares themselves have improved lately and seem to be attracting some interest. Whether that's due to the overall situation within the Agri area or something else, I wouldn't presume to know. The conversion rate seems generous, but then again - I don't have a lot of experience in rating convertible debentures. Any thoughts or suggestions are most welcome - whether good or bad, happy to listen!
Thanks,
Dawn

Q: Good morning,

As some of my rate reset preferreds are being recalled, I have been looking for replacements with more term. One that looks attractive is MFC.PR.Q. It pays a dividend of 4.7% until June 2023. The price has dropped from $25 to under $24 in the last 5 days increasing the yield to almost 5%. I have noticed that preferreds have been volatile lately. Is there anything wrong with this one?

Q: I have been seeing a gradual price loss with some of the example preferred stocks I hold shown above.
With the continuing disaster going on in Ukraine and its inflationary impact, should I expect this to further reduce valuations for these types of investments as interest rates rise?

Q: I would like to add to these , but would rising interest rates be of concern. Thank You.

Q: Peter,

My preferred shares keep getting redeemed. Please give some suggestions for p/s that would be appropriate for a rising interest rate environment. Would you stick with rate resets or would you think perpetuals would be discounted now?

Thank you

Paul

Q: Hi,
I am puzzled by Intact's jump in price today, it isn't earnings related, but seems rather significant. Also, given that they have just issued preferred's at 5.25%, would you rate these as a good addition to a diversified portfolio looking to add a lower volatility holding for income? Thanks for your valued thoughts.
Dawn

Q: Do you know when the next reset for this is coming ,and also how often does it reset if we got say 4 hikes this year does it go up in tandem with the hikes or is it tied to a schedule,basically just want to know how this works ....Thanks

Q: You have the profile of the RY.PR.S shares. It has a 4.8% dividend.
I was looking at it for some stability during current strong market swings.
Am wondering how it compares to RY itself -
How the dividend is set since it says 'rate reset'.
If the dividend eligible under CRA or is it a ROC
If there is a management fee
It seems like the only asset is RY
There are no questions on it. Would you own it?
Thanks a lot for your views and guidance.

Q: I have held this fund for years and have enjoyed a dividend payment of 7 dollars each month for each 100 shares I hold. Since mid-November The price of shares/units have been falling. Am I missing something that is causing this decrease in value.

Q: Is eif.db.i a safe bond and do you like it?

Q: Hi, I was planning to buy floating rates preferred shares to profit from future rates increases. Many preferred reset shares have a floating rate counterpart. At reset, the 3months floating rate shares may, under some conditions, be converted to the 5-years fixed reset and vice versa. Sometimes the floating shares are forced to convert if the float is too small. (Example : Enb.pb and Enb.pc which have a reset date in May 2022). First question: In general can a company redeem only one and not both « linked » shares. Can they redeem the floating shares any time or only at the fixed reset date?.

For strategy, would you choose a cheap low coupon floating share (some lower than 1.5%), giving up on a higher short-term yield, but with more leverage when rates increase, thus good capital gain. In this case, would a 2 years time frame be a good one or too short? Or would you choose a higher coupon (many between 2-3%) and a longer time frame?

All rate-reset preferred shares I hold had already a nice move in 2021, I do not think there is much to be gained right now. Many are being redeemed. The banks’preferred will disappear in the next years and are priced accordingly, too expansive. That’s why I’m interested in floating-rate shares. Some perpetual preferred (BCE, BAM, ..) have floating rates linked to the prime rate, also very successful in 2021. Easier to bet on ? (I own already BCE.pr.b and BCE.pr.d)

Best Wishes for 2022 to the team.

Q: Can you provide a recommendation for the the equivalent to PFFA in Canada. i am heading into retirement so looking for dividends.

Thank you and merry Christmas

Q: I owned ECN.PR.A in my RRSP. I bought it primarily for income purposes. They were redeemed on December 31. I am thinking of reinvesting in ECN.PR.C with the funds that I received at redemption. What is the chance that it will be redeemed? What is the earliest that ECN can redeem these preferred shares?

Q: More of an educational question on Convertable Bonds, e.g. NFI conv bonds issued 2 Dec 2020 at $1000 per bond paying 5% interest convertable to common shares at $33.15 anytime before or on maturity in 15 Jan 2027. These trade on the TSX under NFI.DB currently at $99.00. How does the price go from 1000 to 99. Would I be buying the "bond" or something else. What price would I get on maturity. Is it common for convertable debentures to trade on the TSX.
Thanks in advance. Ken

Q: Hi All at 5i!!! Is there a significant difference between CPD and ZPR??? Would one be better than the other for income and security??
Cheers, Tamara

Q: Any idea why preferreds are collapsing the last few weeks? Some to below their recall rates of $25. I only own rate reset preferreds and the BMO fund ZPR. With the prospect of higher rates I can see why perpetuals would drop, but rate reset preferreds should benefit from higher rates. Even those with minimum resets of 5% are on the decline. Thanks.

Q: Not sure that I completely understand what a variable dividend is and how it works. Is the same as a variable mortgage rate?

Q: Good morning,
I have noticed that my holdings in the above shares have declined to about the issue price of $25 in the last couple of weeks. I understand that BIP.PR.D is due to reset in January 2022 and ALA.PR.K in February. The price movement suggests to me that the companies plan to recall these shares but I haven't found any statements that they intend do so. It would make sense if they did as they will otherwise have to continue to pay a 5% dividend for the next five years. Do you have any information on this? I'm thinking that if I can buy more shares at $25 or less I will get one dividend and then a return of my $25 or I will continue to get 5% on those shares for the next 5 years.

Q: This preferred is being redeemed. Is CPD a suitable replacement?