Investment Q&A

Q: Re: FTS.IR
I am an owner of FTS and have been quite interested in following the merger/take over of UNS. I have been part of other take overs/buyouts with other companies but can't figure out why the .IR units are pounding so much higher. I was hoping you would be able to tell me what is happening with these .IR units and why they are gaining so much. Thanks

Q: I would appreciate your comments on the new Canexus Convertible Debenture. Interest at 6.5% is attractive as long as the company still has a viable future.

Q: There have been exchanges of information on BCE floating rate pfd's and D was suggested as a pure floater, suitable for one of my needs. BCE has information on their pfds in chart form. In that form, under pfd D, the following appears under "Divedend Terms". (D is under the AD heading)

Until March 1, 2018, series AD shareholders are entitled to receive monthly, floating adjustable cash dividends computed in accordance with the terms and conditions attached to such shares.

With this wealth of information in mind, I went to the 2013 annual report for enlightenment. Here's the clarifying quote.

Holders of series S,Y,AB,AD,AE,AN and AT are entitled to floating, adjustable cumulative monthly dividends. The floating dividend on these shares is calculated every month, as set out in BCE's articles of amalgamation, as amended.

Well, that's certainly worth knowing. I wouldn't want to receive a dividend which was calculated under any old terms.

Perhaps you folks could help. I only want to know what happens to the BCE D's on March 1, 2018 and subsequently, if mentioned.

Thanks. Tim......

Q: Hi, I hold Bank of America (BAC) and Morgan Stanley (MS). Since MS has done so much better than BAC, I am thinking of selling BAC and buying MS.PR A. Your thoughts? And thanks for this fantastic bank of advice--my daily treat!

Q: hi what do you think of SPFF(super income preferred ETF).Risk and reward.Thanks and have a good day.EBRAHIM

Q: Looking for some safe income going forward...would you suggest cdn preferred shares?....if so, what do you recommend? Thanks.

Q: How do you feel about the Enbridge Inc. 4.40 % Rate Reset Preference Shares, Series 11 issue announced today? Is this a good, safe hold? Any additional details you can provide about "preference shares"? Thanks!

Q: Good Morning folks,
As part of a query today you stated the following, "CPD could be replaced with a rock-solid floating rate preferred such as BCE. PRE. AD "- This symbol doesn't show but BCE.PR.A and BCE.PR.D do show on a Morningstar search. If these are what you are referring to, which would be the better?
Many thanks, Len

Q: Could I have you valued opinion on floating rate prefs? The one I am looking at is BCE.PR.D. Thank You

Q: Peter Do you known of any Canadian div stocks or prefs that pay their div in US funds?
Kind Regards
Stan

Q: Dear Peter and team: Do you think convertible debentures are a good idea in a RIF account?
Thanks so much. Jean

Q: own 800 shares of BAM.PF.C perpetual series 36 at 4.85%. bought at IPO down 13.6% if i take dividend into account loss is around 7.5%.In view of eventual rise in rates selling now seems like the best option.
Your comments please.

Q: Hi Peter,

I have had several bank preferred shares redeemed recently and I'm looking to replace them for the dividend income. Can you make a suggestion of at least 4 preferred's that would be suitable replacements?

Thanks,
Dave

Q: Hello Peter :
I have had very little experience with Convertible Debentures and need some advice.
I own $50,000 of Algoma Central Convertible debentures ALC.DB which I bought at $108.00 a while ago. My Book Value is $54,000.00 and the current Market Value is $56,550.00 for an unrealized gain of $$2,550.00, and an annual dividend income of $3,000.00 for the next 4 years.

The National Post give this information about ALC.DB :
Coupon 6.00%
Maturity 31Mar18
Last Price $113.10
Parity $100.71
Yield to Maturity 2.50%
Premium 11.91%
Conversion Ratio 6.49
Conversion Price $15.40
Current share price [ALC] $15.79

I would be quite pleased to own the common shares for a very long term hold unless there is an advantage to holding the debentures.
At a Conversion Ratio of 6.49 am I correct that I would receive 3245 common shares?
Does this mean I could now advantageously convert my debentures into shares. If I am in effect just earning 2.50% yield now and the yield on the shares is 1.77% there isn't much difference and the share dividend has the dividend tax credit advantage.

The debentures are held with Scotia McLeod so I suppose there is a fee for doing the conversion, and would I be subject to tax on the unrealized gain if I do the conversion?

Would you go ahead with the conversion or just wait and hold the debentures? Any other information or advice you could provide on this issue would be appreciated.
Thank you............ Paul

Q: Good morning,
In a RRSP acct we own CPX.PR.A (Capital Power Corp. cumulative rate reset sr 1 prd). Bought in Dec/13 at $18.49 + a 2.3% commission. It is at 20.77 now and we are being advised to sell it today. We are just about retired and the yield looks good to us for income. Would you advise selling or holding it and why? We appreciate what we are learning from 5i.
Thank you for your insights and assistance, Len

Q: What is your assessment on Fortis 4% unsecured subordinated convertible debentures that were closed this Jan

Q: Team 5i.Received IPL notice of annual meeting. They want to create new class of preferred shares class A. How will this effect the stock. Good or bad

Q: Hi Team,
Do preferred shares generally follow the common shares [up or down] or are preferred shares more influenced by other factors such as interest rates?
As an example, I own FTS.PR.J - if the common shares of Fortis [FTS] keeps working its way back up to say $35.00, will my preferred come back to $25?

Q: Hi, I am interested in Toronto Dominion's preferred share TD.PR.O. It yields 4.85% & is presently trading above 25$. The prospectus states that after Oct 30, 2014, the bank will only pay 25$ if the bank chooses to redeem the shares. Would you at 5i have any insight as to what might happen to the yield after Oct 30? Does it remain at 4.85% forever. Thanks ... Cal

Q: Hello Peter
I bought NorthWest Healthcare Properties REIT (TSX: NWH.UN) in 2013. I now think it is structured as a Limited Partnership because they pay "distributions" and not "dividends", but their website doesn't actually say so. Are all .UN listings limited partnerships?

Their website does say : "If necessary an extra distribution will be declared on December 31 each year such that the REIT will not be liable for tax that year."

They also say : "In 2013, 100% of the distributions were tax deferred, by reason of the REIT’s ability to claim capital costs allowance. The adjusted cost base of the Units by the Unitholder will generally be reduced by the non-taxable portion of the distribution."

Their table on the website shows "Total Taxable Income Per Unit" is zero for 2013, but it says the amount is shown in Box 42 [on the presumed T-slip]. The distributions I have received are evidently a "Return of Capital".

Does that mean the distributions I received are not taxable in any way and does that mean they won't be issuing a T-slip to include in my tax return? I haven't received one yet and I have received no answer back from my enquiry to the company. I am ready to file my tax return now but don't know if I should wait till nearly the end of April in case they do send one.

Many thanks........... Paul