Investment Q&A

Q: Alqonquin, Capial Power, and Altagas have rate reset preferred shares selling at a significant discount with reset dates in 2018. With a 5 year Government rate of .55 to .7 they have issues that will still offer a very attractive rate of return. For a conservative investor would you rate these issuing companies as an acceptable TFSA investment?. How would you rank them?

Thanks Team

Q: My question regarding BCE.PR.S. After a number of years of owing this preferred, is it worth holding any longer. It has lost a lot of value since my purchase, I believe it has a floating rate dividend.
Thanks for your opinion. I was thinking of switching to BCE common share.

Shirley

Q: Sorry for resubmitting the same question again. It seems that I am doing something wrong. Just realized that the name of the Company didn't appear on my last submission, so I am putting the company name and the symbol in the text, (Capstone Mining CSE.PR.A). My original question was sent two days ago, and probably did the same mistake.

I am in dilemma in choosing between the offer to convert series A to a fixed reset for five years at 3.271%, to convert to the floating rate preferred, initial quarterly rate 3.204% or to just take my losses and sell. What would you suggest, how safe is the dividends on this prefered now it is in the hands of the new company that bought Capstone and considering that the rate of return of over 6% based on current price? What would be a good replacement if income requirement isn't important and would rather have some growth and less dividend?

Thanks.

Q: I am considering adding some preferred shares to my portfolios for income. Would you stay away from them for now? If not, would you recommend rate resets or perpetuals?
Thanks

Q: How can I check what type of a Preferred a share is? I use TD Direct Markets & Research and when I enter NPI.PR.C all I see is what its value is and what it pays. Could you please comment on NPI.PR.C?
Thank you

Q: Hi there

I wanted some feedback about putting about 5% of my portfolio into Preferred shares for income purposes for over a 5 year hold. I know I could buy the preferred ETF CPD but have been hurt before in ETF bond funds so feel better buying two or three individual issues where I know up front what I will be getting in return for at least the first few years. Would it be possible to provide three preferred issues that you would recommend for income?

Thanks so much

Q: I hold 800 shares of Aim.pr.c (bought at issue of $25 in Jan/2014). Can you give any insights into holding this preferred.
Thanks,
Ted

Q: What is your outlook for this Canexus Debenture? CUS.DB.D

Q: Good Morning: Could I please get your opinion on the merits, risks and investibility of a couple of Brookfield Renewable preferreds (both perpetuals): namely, brf.pr.e and prf.pr.f. Many thanks, Don

Q: Can you explain the news that came out June 30? Not sure I understand any of it. The stock is down substantially today so it is obviously pretty bad.

Q: Good Afternoon,
I hold a BCE preferred share specifically Series AG ticker symbol BCE.pf.G, currently trading around $13.40 with par value of $25. Any idea why this has dropped so much? I understand there was recently an option to convert into a floating rate preferred but I chose to keep my fixed rate preferred. Any thoughts? Is there a reset or something coming up and there is concern a lower coupon is coming? Thank-you

Q: I am struggling to understand the relationship between dividends from common shares versus preferreds. I understand the the preferred shares will be paid before the common shares. However preferred shares do not participate in any future dividend growth rates. As an example National Bank common shares (trading at $44.09)are offering annual dividend of $2.20 (yield of 4.99%) .The recent issue of national bank preferred NA.PR.A issue price of $25 offer dividend of $1.35 (yield of 5.4%). If the div on common were to grow by a modest 3% over the next 5 years the dividend would be $2.55 or 5.78% surpassing the preferred shares by almost .4%. Historically the div growth rate had been 10.5% which would make the case to own the common shares more compelling.
The argument that can be made for preferreds is when the company becomes distressed the dividends on the preferreds would be paid first. However is the protections really of values as both the share price of the common and preferred will most likely fall when the company is in distress.

My question is how do you calculate the breakeven between common versus preferred shares when looking at the dividends.

Regards...Antoine

Q: What do you think of EFN.PR.C, they're down from where I bought but the dividend has more than made up for that....would you continue to hold? Thanks.

Q: There have been 2 preferred issues that I know of recently
that have minimum resets that are very attractive for
a taxable acct. PPl.pr.m and trp.pr.j receting at 5.75 and 5.5% respectively. Do you know of any others ? and apart
from credit risk what is the downside with these ?
Thank you Ian

Q: FTP.DB matures at the end of the year. It has a healthy coupon rate and is selling at a discount to par value. Do you see this convertible debenture as an opportunistic investment with principal repaid within 7 months?

Q: AIM.PR.C - these have taken a beating. With the current high yield and likely about 5% on re-set in 2019 do you think it is "worth" adding to an existing modest allocation, for income?
Thanks.

Q: BPO.PR.H Called their pref today and am sitting on 8% cash what would you suggest I move into ,
Regards Stan

Q: I hold 'IBG.DB' debentures maturing 2019 June 30 in my TFSA.

If the shares appreciate above the conversion price, then the debentures become a kind of option on the shares, with interest income while you wait. In this case, it seems to make the most sense to sell or convert just prior to maturity (as holding to maturity would mean receiving back only face-value.)

On the other hand, IBI might at some point call the debenture away at face value, in which case the option value disappears. How do I make a judgement on the likelihood of the latter event? Am I missing something as concerns incentives not to hold to maturity?

Q: I have unfortunately owned these pref shares since first issued as EPP.PR.B. They then became CZP.PR.B and are now as noted and related to Atlantic Power. I don't really understand the corporate relationship. However they are a fixed reset and were reset in 2014 and now yield about 10% on their current price of $13.85 or about 5.6% on their issued price of $25.
Please provide your thoughts on this security. Is it worth a continued hold? Do you ever see the market price ever approaching the issue price? Do you consider the pref share dividend to be sustainable? They are unfortunately held in a registered account so no capital loss if sold.
Thanks

Q: Looks like a great div (6%), is the div./investment safe? would you be able give me the conversion details( price and date etc.). I would appreciate having your assessment of it, perhaps can suggest another alike investment. Many thanks. J.A.P., Burlington