Investment Q&A

Q: Hi,

What's your thoughts on stepping into CPD at this juncture for income, long term.

Thanks

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 ?

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

Q: Dundee has a good dividend and lately been on the rise Just wondered how you feel about in in the future.
Thanks for all you do!
Bonnie




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Q: Can a company cut the dividend on their preferred shares as easily as they can on their common shares?

Q: in answer to Stephen's question today did you mean Capstone was acquired; if so by whom?
Hugh

Q: Hello 5i Team
There are three companies that have issued preferred shares (Capstone Infrastructure, Co-operators General Insurance and Empire Life) which do not have publicly traded common shares.
As far as I can determine, the companies still file quarterly/annual financial statements on SEDAR, so I can review the financials of the underlying company.
Questions are:
1 - Why do these companies continue to maintain the listing of these preferred shares and given the low interest rates and low trading price, would it be possible that the companies could redeem the preferred shares or purchase them under a NCIB?
2 - Are there potential opportunities in purchasing these preferred shares at opportunistic prices (similar to mid March lows) if we have a general pull-back in the market. I understand that I could have a long hold period for these preferred shares as a result of low trading volume.
3 - Should I concentrate my effort in reviewing other preferred issues and simply ignore these three issues as "noise".
Thanks

Q: Can you give me 5 US based companies with perpetual preferred shares. Safety is the most important factor.
Thanks

Q: trp.pr.c:ca , do you guys have an opinion about buying this one? thanks.

Q: What is your opinion on these 6% minimum reset preferred. Are they still considered AAA and, as they (B.P.O.) are now under the Brookfield Real estate umbrella, how safe are the preferred dividends in the foreseeable future, anticipating some decline in Office occupancy worldwide?

Q: What wouldyou think of a switch from ENB.PR,F into AQN as i am looking
for growth not just a dividend.Ihave a large loss on ENB.PR.F ,but i dont think it will give me much capital gain.
Thanks Phil.

Q: Lowest sp in 7 years. Down 50 % over 7 years. Ouch !!
Preferred shares overall have been hit very hard for some years.

I don"t get it.... Why ?
The current yield is 6.3%. Why would you not buy?
....thank you

Q: What is the general feeling about this specific issue relative to the current market and interest rate outlook? How does it stackup against other preferred issues of Brookfield? Thanks for all you do for us in these times of turbulence.

Q: Last year I received a "Transfer in Kind" to my RRSP for Polaris Infrastructure senior unsecured convertible debenture; Maturity May 2024 with coupon 7%.
I don't really understand the risks of the convertible debenture world.
Would it be more prudent to hold the debenture to maturity and collect the interest quarterly; or convert to the common stock that is paying dividends of 6.7% ?
What are the risk factors I should compare for Polaris?
Is there a process to convert / sell that I should be aware of?
Thank you.

Q: Can you please recommend a couple of attractive convertible bonds of Canadian blue chip companies. Thanks

Q: Preferred shares.
If a company get taken over by another, do their preferred shares if not redeemed at par, get listed on the other company pref.shares.
for example , hypothetically If Husky got taken over by Suncor, would their preferred then get the benefit of higher rating?
Caution fellow members do not take this as a hint!!
Thank you.

Q: good morning.what would be the downside possibilities of buying this preferred stock.thanks brian w

Q: Hi Team,
Can you please comment on TRP.PR.B $7.97 yield 6.7% ?
Thanks as always,
Tak

Q: Hi Team,
This husky prefer is reset, how often they reset the rate and is it worth to hold this one? Your comment is highly appreciated.
Thanks as always,
Tak

Q: Thank you for your explanation of floating rate versus fixed rate preferreds with my two examples of BAM.PR,B and BRF.PR.E. { I assume by fixed rate you mean perpetual } ..... I don't really understand the preferred space but have been researching the effects of the virus crash versus these stock prices. Overlaying the price pre crash on the various kinds.... Perpetuals had a little drop and climbed back to close to where they were. Whereas fixed rate resets and floating rates fell between 20% and 40% and are still down there. Well we all know interest rates aren't going up any time soon and it sure looks to me like there isn't a lot of room to fall. Two I'm looking at are FTS.PR.I a floating rate preferred and ENB.PR.H a fixed rate reset preferred.... I'm trying to understand why they were hammered so badly when realistically interest rates don't have much room to drop . I'd still be getting the interest rate based on the stock price which would be close to 10% on one and 7% on the other less whatever the amount of the interest rate drop is wouldn't I ? . What is the investment theory that made them correct so much ? And what market conditions would exist to gain back those losses ? ...Visually it looks to me like in the case of the Enbridge product if interest rates were to drop a half a percent my yield would drop from 10% to 9.5% ..... I know there is something I'm not grasping here . I just don't know what it is . Thank you for your guidance through these financial conditions.