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Brookfield Renewable Partners L.P. Class A Preferred Limited Partnership Units Series 13 (BEP.PR.M)
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Enbridge Inc. cumulative redeemable min rate reset preference shares Series 19 (ENB.PF.K)
Q: Hi, what is your opinion on these minimum raté reset prefs? An 8% yield seems interesting given the solidity of the issuers. Am I wrong to assume that they will one day go back to 25$ ? Even if it takes 5-10 years the total return potential and risk/return ratio seems pretty good (especially in a non registered account). Thanks!
5i Research Answer:
While they are redeemable at $25, we would not make assumptions. The company will only redeem if it is in their financial advantage to do so (meaning they can finance at lower rates). It is a possibility, but not likely in a higher rate environment and not something one should 'expect'. If it happens, great, but we would not count on it. But certainly we are comfortable with the credit risk here: both are solid companies with consistent cash flow. The minimum rate helps ensure good dividends even if rates fall again. We would be quite comfortable with these for income investors.