Investment Q&A

Q: P/P $15, 1.5% position. Dropped sharply last 2 trading days($11.75 to current $9.05).Any reasons? Current yield 9.98% mainly due to drop in stock price.Reportedly rate is based on 5yr GOC plus 2.89% & resets on Mar 31/21.I think the 5yr GOC is currently 0.62% which indicates a much lower rate then.Please may I have your opinion.If it is advisable to sell,please give 2 to 3 replacemrents dividend stocks( not preferred) Txs for u usual great services & advices

Q: ..how do you think HFR and CVD will perform as interest rates skid along the bottom?

Q: I have provided a sampling of the Preferred Shares I have in my holdings where most of them have rate renewals out into 2023/24. With prospect of a recession and lower interest rates I have locked in returns for the short-term, would you be able to provide some insight into why their market valuation has dropped 25-30% in most cases? Are investors doubting Royal Bank, Bell, Algonquin Power, etc of being able to meet their debt obligations?

Q: It seems like Groundhog Day regarding the Rate Reset Preferred Shares,
and my laddered holdings of Minimum Rate Reset Preferreds are getting thrown away with all the rest. I hold them with an annuity-like mentality, meaning I don't really care anymore how the market values them, and plan on holding them until the stones are bouncing off the casket lid. While interest rates are widely viewed as being "lower for longer" (at present), why shouldn't I be happy to collect (at least) the minimum dividends (commonly 4% - 5%) which are much better than most fixed-income alternatives) from issues of blue chip credits? The outside risk of dividend suspensions is recognized, but aren't redemptions (if and when they occur) limited to a return of the issue price? What am I missing?

Q: In my RRSP accounts I have built up a laddered GIC portfolio in addition to a variety of stocks and equity etfs, taking the income generated by the portfolio and adding to the ladder. Given the low rates for 5 yr GIC, under 2%, I’m thinking of taking this years income and purchasing CVD, which has a lower payout but more stability than the above mentioned Preferred share ETFs.
I may split my purchase between CVD and one of the above Preferred Share ETFs and am leaning towards ZPR as performance and MER of the 3 is similar but ZPR has a higher dividend payout.
In addition to better income, interest rates should be close to bottoming and if I stage my purchases over the next 3 months I will benefit from unit price appreciation when rates start going up and will have locked in a 5-6% return.
Your thoughts please.

Q: How do you feel about the Pembina preferred shares in terms of quality and potential purchase here?

Thank you

Q: I would appreciate your thoughts on PPL preferred shares. I own the G series, which have dropped significantly over the past few weeks.

Thanks,
John

Q: Hi,

I own the Alaris CVB. Is there danger here of insolvency or would you consider it safe to hold to maturity?

Sheldon

Q: Preferreds in general have been getting kicked for quite some time.
With current bond yields at around 1% and hpr, zpr, cpd at 5%......I don't get it
Thank you

Q: You are right when you say preferred shares are not bonds, they fall fast in a bad market.

Would it be wise to add a modest amount of ZPR or CPD during this period and take the dividend for a while? This would be in an RRSP

Q: I'm looking for ways to hedge exposure to the perpetual preferred market?
I own a large portfolio of Canadian bank, insurance and utility perpetual prefs. All of which I have profits on. This weeks carnage bled into the pref market. I don't try selling because the spread between the bid and the ask is too wide. Not to mention triggering capitoI gains tax.
I was able to place shorts on CPD, ZPR and HPR the day they went ex dividend and that has worked somewhat but to little to late. I don't like using shorts simply because short gains are considered income to the CRA. Plus the duration of the short trade is small as to not payout someone elses dividend!!
There must be a better way to solve this issue? I'm unable to find an ETF that is the polar opposite of CPD. I'm open to all suggestions....options, inverse ETF suggestions, TLT maybe??
Help...

Q: Hi,
Prediction : PWF preferred series I and G will be redeemed. POW put aside 350MM to redeem preferred shares in the latest reorg. These 2 perpetual issues are down significantly since mid-Dec, have the highest coupons and total about 350MM …POW has also perpetuals with high rates but they seem pretty stable. Your guess? Could they be redeemed as soon as this quarter? Thanks.

Q: perpetual preferred shares - I am trying to understand the risks in purchasing perpetual preferreds as part of my fixed income allocation. i am going into retirement so steady income is more important to me than the day to day fluctuations in the face value of these. I understand the risks with rate reset but wondering what i am missing with Perpetuals. I hold a number of them in my US investment account and they have generally been significantly less volatile than the market in general and continue to pay me a nice steady stream of income. Am i missing something here!

Q: ECN has hit a new high. They have raised their dividend and have been buying back shares. But their preferred shares yield over 7%. Buying back the common in these circumstances and not the preferred does not appear to be prudent management. Your comments please.

Q: Good morning,
Would you please tell me what will happen to the Power Financial Preferred shares if Power Corp takes over Power Financial? I currently have some PWF.PR.F.
Thanks for your help.

Q: What will happen to Power Financial Preferred shares because of the merger. I own .PWF.PR.F

Thanks

Q: Is there a concern that BBD may discontinue the dividend on this preferred share?

Q: Should there be concerns that JE will not be able to meet its financial obligations on this convertible debtenture?

Q: Do you have an explanation why ECN.PR.A is trading below par? I would have thought with its 6.5% guaranteed coupon rate that it would not be trading below par.

Q: I've clipped the following out of the original debenture offer:
"The Debentures will be subordinated, unsecured obligations of goeasy and will bear interest at a rate of 5.75% per annum, payable semi-annually in arrears on July 31 and January 31 of each year, commencing January 31, 2018. The Debentures will be convertible at any time at the option of the holders into common shares at a conversion price of $44.00 per share. The Debentures will mature on July 31, 2022.

The Debentures will not be redeemable prior to July 31, 2020. On and after July 31, 2020 and prior to July 31, 2021, the Debentures may be redeemed by the Company, in whole or in part from time to time, on not more than 60 days and not less than 30 days prior notice at a redemption price equal to their principal amount plus accrued and unpaid interest, if any, up to but excluding the date set for redemption, provided that the weighted average trading price of the common shares on the TSX for the 20 consecutive trading days ending five trading days prior to the date on which notice of redemption is provided is at least 125% of the conversion price. On or after July 31, 2021 and prior to the maturity date, the Company may, at its option, redeem the Debentures, in whole or in part, from time to time at a redemption price equal to their principal amount plus accrued and unpaid interest. "
Would I be correct in interpreting this to mean that the company can't redeem the debentures until after the July 31, 2020 date and then only with a minimum of 30 days' notice? I also note the bit about the average trading price having to be 125% of the conversion price and am not sure I understand this wording. If you could help to clarify that I would appreciate it. I am thinking that it is better for me to hold a bit longer, as the 5.75% interest beats what I would receive as a dividend once converted to shares, but doing the math otherwise it seems to come out about even. When is a good time to convert? I assume prior to the date(s) the company can do so for me - but there seems to be two time frames in which the company is able to convert - after July 31, 2020 and after July 31, 2021, with the latter being something you would want to avoid. Am I understanding this correctly? Any additional thoughts you can offer would be appreciated - as always!
Thanks for all your good work!
Dawn