Investment Q&A

Q: Hello 5i team

This fall I accumulated a basket of perpetual preferred shares composed of L.PR.B, BN.PR.N, SLF.PR.D, MFC.PR.C, FTS.PR.F (all recommended by 5i in 2023). The (TFSA) return on this basket is currently 8% (dividend not included).

(L.PR.B has the highest weighting = 40%)


Questions :

1- What should I expect in the coming months in the current rate and economic context, including the possibility of a recession?

2- Would you feel comfortable keeping this basket for the next 5 years?


Thanks to the whole team.

Q: Hello 5i Team

My understanding is all (12 issues) of the Brookfield Office Property Preferred shares (BPO) were removed from the S&P TSX Preferred Share Index (TXPR) effective Friday January 18 (the quarterly rebalancing date). My understanding is the BPO shares were removed because S&P downgraded them to P-4 on December 21, 2023.

However I can find no mention of this re-balancing event on the S&P website or other news sources. I have previously seen new releases from S&P when companies are added/removed from the S&P TSX 60 and S&P TSX Composite index.

After reviewing the holdings listing for the CPD etf (which tracks TXPR), the BPO shares are now removed.

Is there any other news sources I should be monitoring? This seems to be a material event that S&P did not disclose?

Thanks

Q: Brookfield Office prefs have been in the doghouse presumably because there was concern about the potential of Brookfield not standing behind these products. They've had a surge today - is there new sentiment that the concern was unwarranted?

Could you comment on Payfare's competitive vulnerability in the GIG payment niche they have carved out ?

Thank you, Hugh

Q: hello 5i:
Looking at estimates of Cash Flow (Fastgraphs) for FTS, I see that 2024 is estimated to be 7.69, 2025 is estimated to be 8.08 and 2026 is estimated to be 5.18.
First question is why such a drop off in 2026? A red flag for long term buyers, no?
Second question: how would such a scenario affect dividends/dividend increases?
Third question: how would preferred shares and in particular FTS.PR.K be affected?
thanks
Paul L

Q: hello 5I:
I'm looking to add a rate reset preferred to my RRIF, and am considering BIK.PR.A. The possibility of the preferred being called seems like a low risk idea. Could you give me some other options in this area, using only preferreds that you find attractive?
thanks
Paul L

Q: Good morning 5i;

I do not often see questions/comments regarding preferred shares; of which I confess I understand very little. Do you have a few good resource recommendations where one could educate themselves on these investment vehicles?

I would also be interested to know if there are any (understanding there's thousands of possibilities) preferred shares or preferred share ETF's you would suggest could be examined more closely for investment.

Thanks very much!

Q: C.PR.J I'm thinking of repurchasing these preferred shares as the were sold by Citigroup on me recently. Do you know when the next opportunity for Citigroup is to retire these shares is? really like the div. on these shares but having them sold on me not so much. What do you think of these preferred shares?
Thanks

Q:
your opinion on Brookfield infrastructure Class A

Q: This preferred share just auto sold close to half of what I own? Your help is appreciated!

Q: I would appreciate your thoughts on the above minimum rate reset preferred share. Please confirm the dividend receives the dividend tax credit , the new dividend rate and the security of the dividend. Also do you have any thoughts about why it appears to be trading at a discount to its peers especially when it has just reset at a higher rate. Do you have any concerns about these shares?Thanks Brian

Q: If interest rates start to drop will preferred share prices rise?

Q: I have been looking to add some exposure to preferred shares. In the USA there is a fund with the ticker PFFA which is trading well below par which makes the yield just shy of 10 per cent. If, or better said when yields start falling (And I hope that doesn't happen too soon.) this yield would be even enticing and the fund should move up in price closer to par which would give some capital appreciation. Also the CAD is nearing 75 cents which I see as on the upper end of its trading range. Am I missing something? It has a safe (ish) yield, potential for capital appreciation and is in USD all of which I like. Merry Christmas and a Joyful start to 2024.

Q: Hello 5i,

The turnaround that began in early November on many preferred stocks already seems to be reversing on some of them and heading back towards their lows. Is there a logical reason for this? (My question concerns perpetual preferreds, here are some examples - MFC.PR.C or FTS.PR.F)

Any information is welcome.

Thank you

Q: There is very little information about about this issue with very high yield office property investment. In general office property REITs are loosing ground with asset valuation. How do one get to analyse it other than its name sake being a part of Brookfield managed manager.

Q: hi. assuming rates stay the same, or begin to fall next year, do you like these ETF's? are they still your top picks for pref.s and bond ETF's in Canada? cheers, Chris

Q: Are preferred shares treated the same as stocks,in that you still get the interest or dividend if you sell it on the ex dividend/interest payment date??

Q: Issued at $25 and now trading at $12.10 for a yield of over 13%. This seems to imply there is a good chance Brookfield may walk away from these securities? Your thoughts?

Thanks

Q: Today Brian asked about the dividend rate for this pref. share.
You have indicated that the rate is .307
I believe the correct rate is 6.525%.
Can you please explain.
Thanks

Q: Regarding Brian’s question:
I can’t find a press release, but I think this issue was in fact scheduled to reset on Dec 1 , 2023
Pembina website shows a dividend rate of 6.525%, presumably based on par at $25. This would run until Dec 1, 2028.
Adds up to about $1.63 per annum or $.4078 quarterly.
Stock closed at $20 so if bought at that price would effectively yield about 8.16%.
I apologize if my math or info is incorrect, but this is worth rechecking I think.

Q: Ref Brian question on Friday, Dec 1 :

``The annual dividend rate for the Series 1 Shares for the five-year period from and including December 1, 2023, to, but excluding, December 1, 2028, will be 6.525 percent, being equal to the five-year Government of Canada bond yield of 4.055 percent determined as of today plus 2.47 percent, in accordance with the terms of the Series 1 Shares.`` .

According to me, the dividend should now be 0.4075 …