Investment Q&A

Q: Would you please help me understand how the preferred share TD.PF.B resets it’s new interest rate later this year. The prospectus states that the new interest rate will be equal to sum of the Government of Canada Yield on the Fixed Rate Calculation Date plus 2.27%. My two questions are 1) What is the present Government of Canada Yield as mentioned in the prospectus to be found on the Bloomberg Screen GCAN5YR page, and 2) What is the Fixed Rate Calculation date? Is it July 31 2019 as mentioned in various parts of the prospectus. Thanks ... Cal

Q: I hold the above. Is it true that institutional investors are not very active In the preferred market? If this is true then why should retail investors hold these investments, especially given the expeience .of the last few years with the reset disaster?

Q: Ecn's preferred shares, ECN.PR.A, are down $5.00 or so since their issue last year, pay over 8% & their issuer ECN seems to be doing well. Is this quite a risky investment with a dividend of 8% percent for someone seeking yield? Is it fear of rising interest causing the drop or is there a problem with ECN that I'm unaware of? Thanks as always for your sage advice.
Dave

Q: Hello. Happy New Year

I own several preferred shares issued by different companies... ENB(reset), FTS(fixed), FFH(reset), TRP(reset). I bought them many years ago and have some loss. Since they're all outside my RRSP and TFS, I'm thinking to sell all, replace them with new preferred shares issued by another companies and then claim a capital loss. Do you think it is a good idea?

Questions:
1) What preferred shares do you suggest I should buy, fixed reset, perpetual?
2) Which companies preferred shares are ok to buy?

Thanks

Q: Hi being a holder of pbh for many years I sold
Half on the way up at $100 and the other half on the way down at $100 .
I have been 50 % cash for the last while and am now starting to dip my toe back in.
I have taken a full position in Pbh.db.g .
Can I have your opinion on this move.
Kind regards Stan

Q: I am looking to purchase some prefer shares because the prefer shares price down quite a bit in some cases. I compared two prefer shares offered by the same company "BrookField Asset Management Inc". BAM.PF.D , current price $21.10 yield 5.81% vs. BAM.PF.I current price $25.58 yield 4.63%. Both have the same face value of $25, why priced so differently on the market, are their risks different? So in general, how to pickup a prefer share from others?

Thanks,

Q: I purchased 300 shares of ENB.PR.V on TSX @$21.25 but Itrade charged me $29.24 USD, on inquiring with them, they told me this PR would only be purchased in USD. I understand dividend is paid in USD . How could I tell when I purchased them (for future) since quotation was in Canadian dollars? Lots of Canadian companies pay a dividend in USD
Thank you
Cec

Q: It looks like Western One has sold. What happens with the Convertible Debentures that were coming due in June 2020? Do I as a holder have to take any action?

Kerry

Q: If I purchase ENB.PR.V (series!) will I receive$0.372 USD per Q until recalled by Embridge. If I held it in TFSA, in Canadian dollars would there be any US holding tax?
What is recall date? Would it be for $25.00?
Thank You
Cec

Q: I initially purchased these preferred shares when they were yielding over 7% for income in my RRSP. Today they are yielding over 9% as the price has fallen considerably. Normally I would be concerned with an investment yielding 9%, but ECN.PR.A have a minimum dividend (6.5% for $25 face value). Do I have reason to be concerned or do you see this as a buying opportunity especially since they have the minimum dividend guarantee (as long as the dividend is being paid)?

Q: Would you be able to list a number of convertible debentures from’safe’ companies and at reasonable rates?
Thank you, Team!
Happy Holidays! Let’s hope for a better 2019...

Q: Seasons greeting to the 5i team. I hold the C series preferred shares of ECN. Like many others my cost for this rate reset preferred is much higher. I understand the company has the option to redeem these shares at a specific price at different times in the future. I am wondering if at some point in the future (if held until then) the company is obligated to buy them back at par value? In other words as a shareholder can I force the company to take them back at some point and receive the $25 par value? Thanks.

Mario.

Q: Hi team, can you tell me if there is any benefit to owning Preferred shares of a company or a bank as apposed to owning the regular shares. Is one better than the other, if so how and when would you recommend one over the other. Could you possibly recommend some based on your answer. Thanks, Nick

Q: You answered a question on ECN.PR.C I would like to ask a similar question about ECN.PR.A. It has dropped a further $3 since last Thursday. Do you see any particular weakness other than the general conditions you have answered on previous preferred reset questions? Is the share buyback of ECN common shares weakening the company's position of paying interest? Most of my resets have been called back at reset date and new stock issued at lower rates so I have not replaced them. Is that a possibility here and with the C's? (deduct what you feel appropriate)
Thank you and Best wishes for the Christmas Season

Q: Recently, I asked about adding to ECN.PR.C at $21 and you replied it was fine to hold but not to add (thanks). Now it's $17 and paying 9%. It is a rate reset preferred and I thought the guaranteed floor was 6.25% upon reset but you recently said otherwise in another reply.
Should I buy it now and what is the reset minimum?
Thanks.

Q: Thinking of selling CPD and averaging down on ECN.PR.A My reasoning indicates that the reset return on CPD portfolio will continue to fall as the yield flattens or inverts.
In the case of ECN.PR..A if 5 year yield is at 1.06 or lower the yield is still 6.25%. Basically I’m saying there is a floor under ECN.PR.A but not CPD. What is your opinion ?

Q: Hello
Is ALA.PR.U in danger of a dividend cut? Do preferreds cut ?
I like the dividend tax credit on such a high USD yielding pref.
Any comments or warnings are welcome..
Thanks

Q: Regarding EFN.PR.C - assuming interest rates stay the same would you expect, all things being equal, that the price will go up or down on the re-set in March 2019?
Thanks

Q: Hi 5i, Greetings . I am holding CPD etf and some BIP.Pr.D and BEP.Pr.K as part of fixed income allocation. I always considered these to be held forever, but times seem to be changing and interest rate outlook is uncertain., Should these be held and wait it out or bail now and assess later? Thanks for the service. Ted

Q: Hi 5i Team

I'm primarily an income oriented investor. I'm uncertain about where interest rates will go over the next year. I think we're close to a plateau but who knows. I don't currently own any fixed rate preferreds but am thinking of buying some (maybe up to 10% made up of 5 holdings with different reset dates). I like the dividends and see them as a kind of interest rate hedge against the dividend paying commons. My thinking is that, all else being equal, resets are supposed to increase in price with rising interest rates while dividend payers tend to decline (subject to their ability to increase their dividend).

I understand that other company/market influences may move both preferreds and common in the same direction, I'm just thinking of the interest rate issue at this point. Your thoughts?

Thanks, as always
Peter