Investment Q&A

Q: I own a portfolio of preferreds...both reset and perpetual. Many of the Perpetual shares have returned to $25 and above. I want to role out of a few of these names and buy some other perpetual shares that have some upside potential. A name I came across is INE.PR.C. The investment currently yields 6.5%. DBRS rates it as PFD 4 high which is about as low a credit quality as you can get. Yet the market...as well as the comments on your service seem to like the common shares. Also the price in reflection to the yield seems very mispriced in the current preferred market. Is there something I'm missing??

Q: I have no fixed income in my portfolio. I'm 63 and have been retired five years. I'm still a fairly aggressive investor and need some appreciation from my holdings to fund my lifestyle. In this low-rate environment, I have little interest in bonds but would like your opinion on preferreds. The new issues seem to have addressed the reset problem. Is this true and can you provide some names with a nice return, reasonable safety and possibly trading below par. The last criteria is the least important.

Q: I bought some Zargon debentures as a speculation under $50 and they have had a good run with the news of an asset sale. Assuming the sale closes and net debt is down to $35 million do you think the debentures should be held to redemption next year or does the remaining risk favor cashing in now.
Also, does Toscana's sale of 6% of their production to reduce their debt by about 20% improve the prospects of that company's debentures enough to consider them?
Thanks, Jason

Q: Saw your suggestion for CPD, XHY, ZRE for dividend income and wondered what would drive each of these securities price performance given that their overall return will be a mixture of price appreciation/depreciation as well as yield and each has a significantly different price history. I'm not planning to blend as I think you should know what drives each investment. I also saw your two notes on CPD so what I think I need is an overview of the relevant price drivers please. Thank you

Q: I own the 5.5% Aecon 31 Dec 18 convertible debentures. They are trading at about $109, and I bought them in Dec 2014 at about par. Should I take my profit now? If I wait until maturity, I will lose the current premium. I suppose they are trading at a premium because of the embedded warrant value.

Q: I am a senior who needs dividends. Currently preferred shares are 20% of my taxable account(10% overall). I hold PPL.PR.M and ALA.PR.I. Could you recommend 2-3 other minimum rate resets?
I held and sold my Concordia shares the day before you took them out of the growth portfolio. Your advice has been great and very consistent. I wish 5i was around 50 years ago.

Thanks, Jim

Q: Can the terms of the recently announced debenture be seen to suggest good things are in store for this company? The deal has a conversion option that is 30% - 40% higher than the current stock price. Given that this stock has shown very little growth over the past five years and you have suggested previously that you feel it is primarily an income stock it seems like a high bar to reach to convert. Since this is a bought deal, I would assume that this means the underwriters think this conversion price is quite attractive. Why would the conversion have been set at such a price? Does this strongly suggest something is in the works from a growth/acquisition point of view? And is the interest rate being paid expensive/cheap?

On a secondary note, is the debt from the previous takeover declining at a reasonable rate?

As always, appreciate your insight. I would also like to add that the changes you instituted several months ago are really working well. I am a long time subscriber and I keep learning more and more every day, so thanks.

Paul F.

Q: Are dividends from XPF eligible for the dividend tax credit? Thanks. Joe

Q: Hi Peter What is your thinking on the DH coverts as a long term hold in my RIF.
Kind Regards
Stan

Q: I find this site not too bad for preferred share info
www.prefinfo.com this may be of interest to people asking questions on preferreds

Q: Hi Peter and team,
If US and Canadian stock market goes down say ~10%, how it may impact preferred etf such as ZPR, CPD, PGX (US) or split preferred (e.g. FFN.PR.A)?
Thanks

Q: I found a PREFERRED SHARE listing put out by CIBC Wood Gundy that shows the yield, the price, the reset dates, and reset yields. I have found this very helpful but I don't believe it is a complete listing. I contacted BMO Investorline but their searches weren't helpful. Do you know a site where I can find this information. Thank you for your help.

Q: Good morning,
I own BCE preferred shares BCI-INC-CUM RED 1ST PR-AA. The value has dropped in half since my purchase. I understand these can be redeemed in 2017 for $25.
If BCE decides not to redeem the shares and extends the security can they change(reduce!) the rate of return which is currently 3.5%?

Q: I currently hold BPY (up 50% over cost) and H&R in my portfolio 4% and 3% respectively.
I am considering swapping BPY for BEP for the additional income. Your thoughts?

I also plan to crystallize my capital losses and purchase the following ETFs:
Non registered:
ZPW – US Put Write
ZWE – Europe Covered Call hedged to CAD.
ZWH – US covered call
CPD – CAD preferred
XRE – Capped REIT

Registered (RRIF):
PGX:US – Preferred.

Each would constitute 2% - 3% of my portfolio. Diversification is my intention, but risk and surety of income is the primary consideration in all of the above noted.

Again, your thoughts.

Thank you for considering my questions

Gail

Q: I am looking for general advice on the fixed income side of a portfolio. Where should I go to find fixed income that has a decent return? Or should I not worry about that, and concentrate on dividends from stable companies.

I have about 10% cash, and 10% altogether in ZPR, CVD, CSU.DB (all three obviously not fixed income). BTW, retirement in ten years or so.

Q: Is ZPR primarily constructed of rate reset preferred shares and if yes would this ETF be a good investment right now for income and capital preservation?

Ken

Q: I am considering purchasing a preferred ETF. Perhaps, one of CPD, ZPR, PPS or HPR. I notice that HPR has the lowest yield and highest MER but over the past 5 years it has done appreciable better; i.e., lost quite a bit less, than the other three. Is this attributable to its 'active' management or is there something different about its diversity of preferred shares?

Q: HiPeter & CO.
I'm down 25% on this Fairfax Financial Holding Ltd.Cum PFD Series C Pref rate 4.578%. Is there a chance that the share price will recover in the next year or two, or should I sell and move on.
Thanks Ken

Q: Thank you for providing a great service. Your recent comments on the Canadian Preferred Share Market and iShares CPD are greatly appreciated.
Please comment on
1) Please comment on iShares US Pfd Stock ETF (PFF) which trades in US$.
2) Is there any merit in holding a portion of a fixed income portfolio. PFF is about 5% of my total portfolio. Considering the recent upswing I have done well with PFF and have enjoyed the distributions within a registered RRSP. Should I consider holding it?

Thanks

Stephen

Q: I recently added CPD for fixed income, how do you think it will perform going forward given a Sept/Dec US rate increase? Thanks.