Investment Q&A

Q: Hi, my question is does i5Research have any insight as to why preferred shares have drastically declined in price during November and is there any hope that this trend will reverse. My already underwater collection of Enbridge and bank preferred shares have decreased 7% in value since the start of November. My collection of preferreds are rate reset, resetting in 2019 and where issued with a 3.8% to 4.4% yield. Thanks … Cal

Q: I am considering purchasing ECN preferred for the great yield. Can you explain the difference between ECN.PR.A and ECN.PR.C. I can see the yield from a stock quote but can't figure how the dividend is calculated or when the rate resets on either of these. Which of the two if any would you recommend?
Thanks

Q: I hold HPR and the Dynamic preferred yirld fund. In light of the recent correction in preferred share,, do you advise to hold, buy more or is it time to reduce the positions held.

Q: Altagas preferred shares have really been pummeled in reaction to company developments and the sell off in prefs generally. Do you think they offer reasonable value at these levels and do you believe the dividend is reasonably secure in view of the coming cut in the common dividend? Thanks.

Q: Hello,

Are these Debentures convertible? And if so, what are the terms?

Thanks,
Stephen

Q: Is it time yet to pick up more HPR for long term " fix-income" hold?
Thanks.
Desiree

Q: Hi Peter & Staff,
Would you recommend the above for a good income investment, or do you have some that you like better?

Q: Good morning, I have recently shifted from a third party manager and am reviewing the pref share positions I currently own. All are individual share positions. Am I better off going with CPD versus individual ownership to share risk and also to simplify my management overall. Thanks

Q: Is the decline in preferred shares overdone...how much further down could it go? and under what scenario? For a long term, safe(r), diversified investment, does it not seem like a good time to add to a position?

Q: Hello Team
Could you please give me you opinion on DC.PR.E should I keep holding or sell, it represents about 3% in my overall portfolio. And if I should sell, it seems to be thinly traded how do I get rid of it with out having to sell 50 or a 100 shares at a time. I am down about 35% on this security.

Q: In the preferred share space I own both cpd and Ecn.pr.a. I am down a fair amount on both. Does the market really affect prefs that much. I bought because of the reset feature . Assuming higher interest rates the reset rate would be higher. No indication yet of falling rates in which case I would sell CPD and take my losses. On the other hand minimum rate reset preferred guarantees a specific rate protection on falling interest rates while at the same time having a possible increase in the reset rate if interest rates rise. Looks to me the best of both worlds. My investment is for income. Final question , will price go back to par on reset date.
Can one expect the the closer to reset the closer the value will be to par.

Q: I own a Brookfield Renewable preferred (Series 11) that pays $1.25 (5%) thru to April 30, 2022. If not called, it will convert to the greater of GOCs+382bps, or 5%. Given my view of interest rates, I am comfortable with the position, because even if it is not called, I will be left with what I expect to be a good quality credit with a relatively attractive yield.

My concern is that it seems to have got caught up with the recent volatility, and is trading well below $25. Currently it is $23. I want to add more, but I wonder if I am missing anything here. I would still expect it to be called in 2022, as I just would not expect management to allow it to float at what I expect would be an above market interest rate. But I am already underwater significantly more that I would have ever expected on this, and I am leery of adding to the position.

Thoughts?

Q: Lots of questions to 5i on prefs lately. Some possible are explanations are in a recent article by John Heinzl: "Why preferred shares plunged."
https://www.theglobeandmail.com/investing/education/article-why-prefs-plunged-and-the-acbs-of-the-loblaw-deal/
You can add indiscriminate dumping of issues by CPD,ZPR, and HPR on high volume days as they struggle to keep up with net redemptions. The bid/ask spread on these ETFs is far less than most individual issues, so investors look to them for liquidity.

Q: I own the 5.10 percent minimum rate reset preferred shares (Bpo.pr.e). Are these dividends available for the Canada dividend tax credit or if not how are they taxed? Thanks,Brian

Q: I am retired and own GMP Capital preferred series B in a non-registered account for income. How safe do you think the dividend is? I was encouraged when they recently re-instated the dividend on the common shares, suggesting management confidence in ongoing profitability, yet the pref B price continues to trend lower. Why?

Q: Why the sudden drop of preferred reset shares?
Thanks

Q: Ala fixed rate preferred shares look interesting. Which series of preferred look most attractive. Given that preferred share dividend must be paid before common it would appear that their yield of between 5.5 and 6.75 should be relatively safe.

Q: When one reads the balance sheet are the pref shares included in the long term debt.

Q: Hello 5i Team, I am having trouble understanding the recent behaviour of preferred shares in general. I would sooner not repeat the loss I took several years ago, and until recently had thought my current set-up was “safer”. However, I am now in danger of heading underwater on all but BCE in the following list. Do you see any “red flags” in these holdings going forward that might signal Sell?
BCE.PR.H (Ser AH)
BPO.PR.N (3.782% CUM 6.5 YRRY)
FFH.PR.G (3.318% CUM 5 YR RT RST)
BEP.PR.K (5% CUM MIN RT RST)

I note that CPD has also been moving down more or less in concert with my individual holdings.

Would appreciate your thoughts/insight here.

Thanks,

Q: ZPR is around 75% fixed reset and floating. I would have expected the unit value to rise this year as 5 year rates have moved from around 1.8% to 2.3%. Instead, the unit value has dropped around 7% ytd. Has the spread on preferreds to bonds widened or is there something else going on? Thanks for any insight.