Investment Q&A

Q: I have received notice that my TD.PF.B preferred shares are being reset & I have the option to convert these series 3 preferred shares to series 4 preferred shares. From my understanding of the TD.PF.B series 3 prospectus the series 3 interest rate will be fixed for the next 5 years based on the present Canadian Government 5 year bond rate plus 2.27%. While the series 4 next 5 years interest rate will be calculated every 3 months based on the Canadian Government 3 month Treasury Bill plus 2.27%. My question is, which would you choose, 1) series 3 which will have an approximate 3.8% interest rate for the next 5 years OR 2) series 4 which have the possibility of having a greater or maybe less interest rate over the next 5 years OR 3) sell the shares & purchase shares that have a better chance of future growth. I bought the preferred shares when issued at $25 per shares & am presently underwater by 10% when the 5 years of dividends received are added to today’s market prices. I do not need the dividend as income & the shares are in a registered account. Thanks … Cal

Q: I own convertible debentures shares and many of them have been redeemed before their maturity date in the past few years . The most recent case is DII.DB.U which is being redeemed 5 months before maturity. Why do companies do this? Are they saving that much that is in their best interests not to pay the outstanding interest amount for the remainder of the period to maturity?

Q: Preferred shares are on the upswing today. Can you explain this activity?
Thanks, Joe

Q: 5i Team
I currently own PHN Bond Fund (RBF1110), PHN High Yield Bond Fund (RBF1280) and GICs in my RRSP for the fixed income portion of my portfolio
Would adding a convertible debenture ETF complement the PHN High Yield Bond Fund (RBF1280) or would it be a duplication? The convertible debentures would not exceed 5 % of the total fixed income in the RRSP.
Are there any other Canadian convertible debenture ETFs other than CVD and CXF. Of the two ETFs mentioned, which is your preference?
Is it better to use an ETF for convertible debentures or should I purchase individual company debentures.
Where can I obtain the credit ratings (Moodys/S&P/DBRS) for individual company's convertible debentures.

Thank you for great service.

Q: I am presently holding the first 3 preferred in a non registered account.
BMO is held in a registered account.
Can you kindly analyze the above preferred. Some have decreased in value in the last couple of months. Any idea why this is happening.
Is it time to sell?

Q: Hi, I have 500k in my RRSP with 10% in cash, the rest is in individual gov’nt bonds. I am looking at buying CVD with this cash. Is this a good idea in terms of diversification? What is the difference with straight corporate bonds ETFs? FYI, my total portfolio is balanced, keeping equities in non-registered accounts. Thanks, Martin

Q: I noticed that this ETF is listed as 100 % basic material industry but when looking at the top 10 holding they are mostly bank preferred shares. What would be the better industry classification for this ETF?
Do you like this ETF or would you prefer another one or this one?
Thanks

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