Investment Q&A

Q: I own some of the above preferred shares which reset on April 30/23. If Artis REIT does not call the preferred they reset at 5 year GOC (currently 3.454%) plus 3.93% or about 7.38% . Alternatively, I can covert to the floating rate of 90 day t-bills (currently 4.7%) plus 3.93%. or about 8.63%. I noticed not many preferred with the option to convert to floating rate are successful as they normally require a minimum number of shares . Is there a reason? Are t-bills rates more volatile than GOC rates? Any recommendations?

Q: HI, your though about this ETF
thanks
jean guy

Q: I am interested in adding this preferred to my TFSA. Are there any particular issues that I should I be aware of? DBS gave them a rating of pfd-2 which I understand is an investment grade preferred. I didnt notice an end date to these preferreds.

Thanks, Len

Q: These two preferred are going to be reset next month. Is a conversion from BCE.PC to BCE.PD, or the reverse, tax-free if we choose to do so?

I was very successful in the last 2 years with the BCE.PD floating shares, but would it be wise to let them go and convert to the fixed-reset at this moment of plateauing interest rates? I guess it could depend on the new rates which will be determined on Feb06.

Thanks to the team.

Q: I hold convertible debentures from Invesque IVQ.DB.V, maturing 30 Sept of this year, but which are only trading at 80 cents on the dollar. This seems to indicate that there is a substantial risk of default. In your opinion will I get my principal back or will I be given newly-issued and hence highly diluted IVQ shares? Thanks!

Q: Hi 5i,
Sorry for all the preferred share questions but I'm having problems finding US based fixed rate perpetual and if possible cumulative preferred shares. The ones above are on my buy list can you name three more preferably in other sectors that have high to highest ratings or are unlikely to default. I still have memories of 2008 with the CDOs fiasco so like diversification if possible. Thanks for your service.

Q: Hi. I’ve held Corby since April 2020 and did some profit taking in April when it was trading in the high $19’s; and added to PBH which was trading down.

I’d purchased Corby for safety/stability and reliable income. The dividend is variable and occasionally fluctuates. It has a low beta and has held up well until recently; as I suspect that many investors are seeking better opportunistic for growth.

I’’m considering selling Corby and moving to Loblaw’s Perpetual Preferred for largely the same reason I’d purchased Corby, for safety/reliable income with a lower beta and somewhat higher dividend. It is currently trading at $23.00. As interest rates fall, I can see where there will be some modest growth in addition to a relatively safe dividend. I’m considering L.PR in order to maintain my sector allocation.

In 5i’s view would this trade make sense, or would I be better off “staying the course” on Corby? I currently don’t have any preferred shares. My holdings in the Staples Sector are Corby, Northwest Company and Premium Brands.

Are there any other Staples Preferred shares (either rate reset or perpetual) that you feel are more attractive?

Thanks!

Q: 5i,
Further to Kim's question on Jan 11.

Does adding all the debt for the "go private" not affect the security of the Pref?

Will Cannacord, the company, eventually end up with the debt or will the buy-out shareholders be responsible for the debt?

Thanks,
John

Q: I'm looking at my legacy pile of preferred shares of which I have never been fond and wondering if this isn't a good time to sell and invest in a bond ETF such as XHY. I know you have expressed ambivalence about prefs but have also said in better times the class can do better. However, yields are roughly comparable, I can use the loses and invest the proceeds in XHY or a different bond fund which you might suggest, keeping the investment on the fixed income side of the page, Many thanks. al

Q: Hi 5i, looking to buy one of these Brookfield perpetuals. they all have approx. the same dividend. I like the liquidity of M but cant tell if one of them is cumulative. Can you help me out and rank them. Thanks

Q: I hold some Canaccord Genuity Group preferred shares. Canaccord announced a few days ago that they are looking at taking the company private. But the offer is only for the common shares and not for the preferred shares. It sounds like the company will delist their common shares from the TSX, but its preferred shares will continue to be listed. Should I be worried about this? Thanks.

Q: Hi 5i, I currently own Loblaw preferred and like the fact it’s in the food industry decent dividend and us perpetual. It also trades below $25 which I like. What I don’t like is the PFD-3 rating. Should I have any concerns here and what are your thoughts on this preferred.

Q: Hi 5i happy new year! I believe its time to step into US perpetual preferred shares due to interest rates. I'm having problems finding these and I'm hoping you can help. Quality needs to be high to the highest as this is for my retirement. I am an advocate of diversification so please if you can have a few stable sectors listed, thanks!

Q: The yield on these preferreds is appealing. Can you please highlight all of the risks. Thank you.

Q: Just a follow up to my previous question on the above. I checked with Quadravest and I can tender my preferred at the lesser of $10.00 or the NAV if it's less than $10.00 on December 1/24. According to the last NAV of $15.62 we have 56% downward protection. Given that it holds the 15 biggest companies on the TSX with dividends would you agree that it would be a fairly safe investment with a 9.8% return over the remaining 23 months to maturity?

Q: I have held BEP preferred shares in an RSP for quite awhile and done well with them, but have concern over the potential new US tax implications. Despite the company assurances, I think I would sleep better just being out of BEP. After the dividend this month, my plan is to sell the shares. I am looking at ZPR, which has a somewhat similar yield, and would be much easier to trade. What do you think of ZPR and its dividend sustainability? Recognizing that preferreds have not done too well overall, would you prefer to move into something else?

As an aside, apparently the US attack on limited partnerships includes those held in an RSP. Isn't there a tax treaty that prevents this?

Thank-you, Grant

Q: Merry Christmas everyone and thank you for a wonderful service! I'm looking to purchase six different companies that have preferred shares and would like you to help me pick them. Security of dividend and safety of the companies (staying power) is the top priority here. Therefore if two preferred picks are in the same sector I don't mind as I'm not sure how much diversity matters here.

I currently own TRI and CSU preferred shares and would also like your opinion on them, thanks.

Q: I recently bought some DFN.PR.A at $9.22 which pays a 5.5% dividend monthly. It "matures" on Dec 1, 2024 at which point my understanding I can redeem the shares at $10.. According to my calculations my return should be 9.81%. Is my return calculation correct and do you see much risk since it own the 15 biggest companies in Canada that pay high dividends?

Q: I've noticed that there are a lot of questions recently related to the various entities in the Brookfield empire. I initially thought it was overdone until I realized what a mess Brookfield has become in general. In my case I don't see my preferred X shares listed in my TD Waterhouse self directed account anymore. Have they been restructured? It's really hard to figure out what the heck they've done.

Q: I am looking at buying some preferred shares as part of my Income Portfolio. As interest rates rise the share prices fall. When would be the opportune time to buy them, when intrest rates peak? Since markets are forward looking, when would you start buying? What would be the signal(s) to start buying? I know this is a timing question and timing is seldom perfect. Any quidance/suggestions you can offer would be greatly appreciated.