skip to content
  1. Home
  2. >
  3. Investment Q&A
You can view 3 more answers this month. Sign up for a free trial for unlimited access.

Investment Q&A

Not investment advice or solicitation to buy/sell securities. Do your own due diligence and/or consult an advisor.

Q: Hello
BMO.PR.C jumped today 8%. All other preferred shares jumped around 2-3%. CPD around 2.5%.

Do you know why BMO.PR.C jumped so much (8%). The volume of BMO.PR.C also jumped at 83,000 shares compare to the daily average of around 5,000. I own these shares and I would like to know if there is an explanation?
Thanks
Read Answer Asked by Terry on July 16, 2020
Q: good morning - the bulk of my fixed income assets are in the form of preferred shares which i would very much like to move away from, although I will take a pounding in the values. My prefs pay in the 5% range and I'm wondering what your take is on replacing them say with canadian banks which are also paying roughly the same in dividends at their current prices. I am already overweight in banks and utilities but wonder what the true risks are for a long term holder. I have read several times that holding the banks over an extended period usually outperforms the canadian index. I know the difference between common and prefs, from a legal perspective, and understand that commons can suffer from downdrafts. However, all my prefs have performed so poorly and the future seems so bleak for them that i would like to get rid of them. What advice can you offer me, please. As always, thank you.
Read Answer Asked by alex on July 16, 2020
Q: There are a lot of different BAM preferred shares that one could choose from to invest. Some have dived yields as high as 8%? What is the difference in each of the issues? Why would one not just choose the one with the highest dividend yield? Can you please clarify? Is there a drawback of choosing one over the other? If you had to choose one which would you pick?

Regards,

Brendan
Read Answer Asked by Brendan on July 06, 2020
Q: Hello 5i Team
Is there a website where I can download the CUSIP and/or ISIN for Canadian Preferred Shares and/or other securities?
I am trying to analyse the holdings of CPD/RPF/ZPR and each one presents the holdings with different information (CPD has the CUSIP, RPF has neither, ZPR has the ISIN), none of them indicate the underlying TSE stock symbol and the security description is extremely truncated (mostly company name).
Some of the company websites have the CUSIP and/or ISIN, however the majority do not. Short of emailing the investor relations department do you suggest any other means?
How successful are you in receiving answers from investor relations representatives?
Thanks
Read Answer Asked by Stephen on June 30, 2020
Q: As a follow up to my earlier question about Preferred shares as a form of income. I currently hold about 53% of my portfolio in savings account funds only giving me 1.5% dividend which is low, however as you mentioned the price will not drop so it is safe and also very liquid. I was thinking about taking 1/4 of that money (12% of my total portfolio) and putting it is some preferred share because the dividends are much higher. I do not plan to utilize this amount of funds for a while and it would give me a bit of extra return on my money. I currently have about 8% in common shares of banks, 8% in XLB, 12% in gold stocks, 12% in technology stocks, the rest in other various stocks not in those groups. I use the Savings Account mutual funds as cash for when I decide to buy stocks and I have been increasing my holdings slowly since the March lows. Would it be better just to buy the common dividend paying stock or is there an advantage to buying the preferred. I know the preferred share have a higher hierarchy if a company goes bankrupt but they are very much more illiquid.

Thanks again,

Brendan

P.S. when are either you or Ryan going to appear on BNN market call again? Have not seen yee there for a while now.
Read Answer Asked by Brendan on June 23, 2020
Q: I sent in a question a 3 days ago about using preferred shares in companies in lieu of savings mutual funds like DYN6000. Did you get the question? Also wondering if Preferred shares is a better option because of the dividend then could you give me a list of 6 to 8 in Canada and 4 in the US that you would recommend. Hope both you Peter and Ryan and your families are staying safe.

Regards,

Brendan
Read Answer Asked by Brendan on June 22, 2020
Q: I asked this question yesterday and I am re-sending as I have not received an answer. Thank You.
Enbridge Inc Pref Ser D
This prefered is currently yielding around 9%. It will reset in Feb 2023. Since interests rates are expected to remain low for the next year or two, is this a safer way to invest in a RIFF for the next 2 years? I expect to sell these shares in 2 years to meet the mandatory withdrawals. What risks should I be concerned about? Other then interest rates going down from here, what can possibly drive the share price further down ?
Read Answer Asked by Joseph on June 11, 2020
Q: Hello Ryan and Peter:

I hope you are all staying well in these trying times. We had our stock club meeting last month and one of our members was promoting hard for preferred shares because of the dividend. We purchased it for the club and I would like to know what are the advantages over the common share beyond the obvious of:
1. Preferred shares have higher pecking order in case of bankruptcy.
2. Dividend of the common share will get cut first before the preferred share dividend cut.

I see more disadvantages than advantages:
1. Dividend of the common share is similar to the preferred.
2. Very illiquid on the markets. The preferred can only trade 3000-5000 per day while the common share trades in the millions.

The slight difference in the dividend does not appear to be worth the risk of illiquidity. Also the higher pecking order in term of bankruptcy seems pointless when it comes to Canadian banks. Also the point of the common share dividend getting cut is not a big advantage when the big banks have not cut their dividend in over 80 years and National Bank I don’t include as one of the big banks.

Is there something that I am missing here.


Regards,

Brendan
Read Answer Asked by Brendan on June 08, 2020
Looking for more? Sign up for a FREE 14 day trial! No credit card required

We invite you to sign up for a 14 day free trial of 5i Research!
Experience all the benefits and tools we have to offer; stock research, model portfolios, Q&A with our experts, and so much more. Join a community of like-minded investors today!