Investment Q&A

Q: Peter,

Is the rate reset spread on preferreds only good until the reset date? If so, do companies tend to renew at a similar spread or can it vary greatly?

Thank you

Paul

Q: https://www.investingforme.com/data-room/rate-reset-preferred-shares

In response to Joseph's question on where investors can find some info on preferreds, here's a site I use for the prospectus of some pref securities.One of the banks also publish a monthly report which includes prices and features of each.

Q: Our holdings mix is off what many advisors would recommend, ie 30% equity, 40% GIC, 30% recall preferreds. Our pref market prices are way underwater but all blue-chip and long-term holds for us unless we both croak. Please mull my question below in the foregoing context: I was nervous about our prefs for some time until having drilled down to try and better understand them. I feel better now, understanding that those recalled will be for the full $25 and, if not recalled, the new return will reflect a $25 per share value which will almost surely be higher than GIC's especially from a tax efficiency perspective. I guess what I'm asking is for you to advise if my take on reset preferred is correct and if any other considerations. Thank you.

Q: Peter; My wife holds some of this ,(4%), in her non registered account. Just to be clear the group as a whole has been downgraded which will leave only retail buyers now ? Is it still a safe hold for income only? Thanks. Rod

Q: Further to Jerry’s June 18 question on TA prefs. In addition to general market weakness prefs were recently downgraded to P4-H by S&P. This would precipitate selling by holders prohibited from holding non investment grade securities.

Q: Hi Peter and Team.Can you explain the recent weakness in the above Prefered?
Thanks Richard

Q: Good morning,

I bought some ENB.PF.V in May, at the time the yield is 6.88%, today its yield is 7.08%, so I want to buy more. I know ENB runs a unique business with a wide moat. I read ENB financial data and found the company keeps issuing new debt to fund dividend and if I am correct that it's payout ratio is even over 100%. So I sold common shares and bought preferred. With today's 7.08% yield, it's very attractive, any risk associate with this series?

I also want to ask if there is a website (free or paid service) has all the information of all Canadian preferred shares include risk rating for investors to do research?

Thank you!
Joseph

Q: I'm down around 20% on these preferreds in less than a year. Will the price ever recover? Hang on to them or bail out. They represent 5% of total portfolio.

Q: Any thoughts on Transalta Preferred H? Price keeps declining and currently yields over 8.6%. The reset is more than 3 years away! Am I missing something?

Jerry

Q: Hi Team, I'm doing some portfolio clean up and am looking to sell some losers...of the stocks listed, which ones would you sell first in order first to last. Also, could you give me recommendations for where to put the money back to work for the top 3 sells?

Q: GMP Capital is selling to Stifel,& wants to buy remaining 2/3 of RichardsonsGMP that it does not already own.What will happen to GMP.PR.B? In Oct 2016 J Hass on BNN said that the buyer will have to redeem GMP.Pr.B at the $25 par value.You said not necessary so.It is now $12.10 up $1.46 on 19k shares,higher than the 2.6m average,Is it advisable to add to my $15 p/p in 2016? Txs for u usual great services & opinions

Q: I own a substantial amount of Cumulative Redeemable FIXED RATE Reset First Preference Series M Cumulative shares, which I purchased for the initial price of $25.00 per share. I also purchased additional shares at a later date for around $20.00

The Series M shares can be converted into series N Cumulative Redeemable FLOATING RATE First Preference Shares on December 1. 2019 My question is:
Since today's value of the series M shares is around $16.60, What will be the price of the new Series N Shares? Does that mean an instant gain (RECOVERY) of $8.40 (to $25.00) after conversion to the series N shares or how does that work? Do you have any suggestions about how to act at the given time, including what to choose? Do I stay with my FIXED RATE shares, do I convert to the FLOATING RATE shares or what?
Thank you for your prompt and valued reply.

Q: Would this be a better way to play the preferred share space vs CPD?

Thanks

Q: Any ideas why rate reset preferreds aren't rebounding along with other safe stocks given the anticipation of steady or falling interest rates? I own CM.PR.T which was issued with a decent dividend of 5.2% but it has fallen from $25.20 per share to $24.16 in less than a month.

Q: I have $ 50,000 to invest I would like to invest in some preferred shares I do not need the funds anytime soon Could you give me some investing criteria to assess whether the pref shares are good value I know alot depends on interest rates but i want to buy companies that are solid

Thank you
Paul

Q: Hi there,

Just some follow up questions on these two etfs. Neither has done well over the last several years in terms of growth, so i suspect one buys these for income only. If so, wouldn't one just buy the one with highest dividend? if you had to pick only one preferred ETF which one would it be and if not one of these 2 which one and why?

Q: Following up John's question on preferred shares. Can you recommend your top 3 picks for preferred shares. Thanks

Q: I’m going defensive in my portfolio. What is your opinion of these 3 possibilities?

Q: With interest rates stable or downward sloping why would a preferred share fund be decreasing in stock value? This should normally increase the value of the preferred shares in the fund, would it not?

Q: I have been looking for ways of boosting my income investments; last year I doubled my GIC's (still less than 10% of investments). This year I'm thinking of buying some preferred shares. They have been doing abysmally; many of the yearly lows are of prefs!
I recall the 1980's when long term bonds looked like a sure way to lose money. Investment grade credits paid over 10% interest for 30 years! I'm thinking out-of-fashion preferreds might be a great investment today (with less upside than 1980 bonds, of course).

John