Investment Q&A

• Premium Income Corporation Preferred Shares (PIC.PR.A)
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Q: Peter,

What is your opinion of Premium Income Preferred Share ( split share ) PIC.PR.A as an income vehicle? Are the payments taxed as dividends? Are there any other associated fees?

Thanks

Paul

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Read Answer Asked by paul on May 14, 2019

Q: what are your thoughts on conv debs as fixed income. The yields are
quite attractive but some consider them equity like. "they are not
bonds and will get hurt in a recession" What are the risks and are they
legitimately fixed income ? Companies like AG Growth, CargoJet, etc.

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Read Answer Asked by Scott on May 13, 2019

• Capital Power Corporation (CPX)
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Q: Hi Peter, Ryan & Co.
Capital Power is selling a new issue of preferred shares (Series 11). They are rate-resets with a 5.75% coupon. As a dividend investor, I like this yield, but am wondering about the strength of CPX's balance sheet. Can you please comment on the company's overall debt load, strength of the balance sheet, and riskiness of this particular issue? Thanks!

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Read Answer Asked by Brian on May 10, 2019

• Royal Bank of Canada Non-Cumulative 5-Year Rate Reset First Preferred Shares Series AZ (RY.PR.Z)
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Q: I currently hold Royal preferred RY.PR.AZ series which Royal is offering to convert to floating rate non cumulative series BA., which will pay a quarterly dividend of 2.21% over T bill rate. If the Bank of Canada decides to lower its rates, will this not affect the dividend? Should I just stay with the AZ series for another 5 yrs? They are held in a RRIF

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Read Answer Asked by steve on May 06, 2019

• Partners Value Split Corp. Class AA Preferred Shares Series 6 (PVS.PR.D)
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• Partners Value Split Corp. Class AA Preferred Shares Series 7 (PVS.PR.E)
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• Brompton Split Banc Corp. Preferred Shares (SBC.PR.A)
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Q: Hi. I'm looking for some 'safe', high yield income for the next 2 years. Do you like any of these split-share corps. for my purposes? If you could please explain you answer. Thank you.

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Read Answer Asked by Toge on April 26, 2019

• Allbanc Split Corp. II Class B Preferred Shares Series 2 (ALB.PR.C)
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• Partners Value Split Corp. Class AA Preferred Shares Series 8 (PVS.PR.F)
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Q: Goodmorning All at 5i! What are your thoughts on split preferred shares as a conservative investment?Any caveats? Cheers, Tamara

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Read Answer Asked by Tamara on April 24, 2019

• iShares S&P/TSX Canadian Preferred Share Index ETF (CPD)
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• Global X Active Preferred Share ETF (HPR)
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• Horizons Active Preferred Share ETF (HPR.A)
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Q: Preferreds declined in Nov-Dec and haven't come back. With interest rate peaking or flattening, is there any chance CPD or HPR will come back?

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Read Answer Asked by John on April 23, 2019

• Surge Energy Inc. (SGY)
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Q: Dear sirs,

Any insights on the new Surge cv debenture ( 6.75%,2024) ?
thank you

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Read Answer Asked by Brad on April 18, 2019

Q: to further clarify a question asked yesterday, what is the longer term (7-10 year) outlook for the capital(par) value of rate reset prefereds issued by enbridge, TransCanada, Brookfield and others issued in the 2014-2016 period that had reset rates without floors in the 2.6-2.7 % range plus bank of Canada 5 yr bond rates. is it worth holding onto them hoping they will appreciate if interest rates go up and the economy holds steady? what is the weight you would give them in a portfolio lasting at least 20 years... thanks

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Read Answer Asked by neal on April 15, 2019

• Bank of Montreal (BMO)
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Q: what's your opinion on a 5 year reset preferred at 5.10% from BMO?

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Read Answer Asked by james on April 12, 2019

• Dundee Corp (DC)
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Q: What is your opinion on Dundee Corp Pref. E that currently yields around 13%.
Is it safe to invest in this?

Antony

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Read Answer Asked by ANTONY on April 12, 2019

• iShares S&P/TSX Canadian Preferred Share Index ETF (CPD)
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Q: Can you tell me what am I missing what is the point in investing in Preferred’s his has lost 40% of its value since 2007 the chart looks horrible If you could time the market you could do better. You could be better off with just blue stocks and bonds.

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Read Answer Asked by fwb181 on April 08, 2019

• iShares S&P/TSX Canadian Preferred Share Index ETF (CPD)
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Q: Are preferred shares suitable for the retail investor?
I admit to not fully understand them but it seems to me that:
- value is primarily impacted by interest rates, so constitutes an interest rate speculation
- the positive or negative effect of an interest rate change will vary depending upon the particular issue
- even on a reset date, an issue will not necessarily trade at par
- the characteristics of individual issues varies a lot, complicating comparisons
- thinner market for individual issues, making for bigger spreads
- trading prices are not transparent
- a pref share ETF may be a better choice
Comments?

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Read Answer Asked by Carl on April 08, 2019

• iShares S&P/TSX Canadian Preferred Share Index ETF (CPD)
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Q: I would like to understand better why preferred shares, as represented by CPD, plummeted in 2007-2008 and again in 2013-2016. They dropped about 35% in the first (recession) episode and about 36% in the second one. Most recently, between September 1, 2018 and now, they have dropped about 13%. How vulnerable would CPD be to another huge drop if the economy continues to weaken through 2019?

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Read Answer Asked by Philip on April 05, 2019

• Canadian Western Bank 5-Year Rate Reset First Preferred Shares Series 7 (CWB.PR.C)
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• Brookfield Office Properties Inc. Class AAA Preference Shares Series AA (BPO.PR.A)
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• Brookfield Office Properties Inc. Class AAA Preference Shares Series P (BPO.PR.P)
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• Pembina Pipeline Corporation Cumulative Redeemable Rate Reset Class A Preferred Shares Series 1 (PPL.PR.A)
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• Element Fleet Management Corp. 6.40% Cumulative 5-Year Rate Reset Preferred Shares Series E (EFN.PR.E)
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• Element Fleet Management Corp. 5.75% Cumulative 5-Year Minimum Rate Reset Preferred Shares Series I (EFN.PR.I)
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• Enbridge Inc. cumulative redeemable preference shares series F (ENB.PR.F)
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Q: I have accounts with Wood Gundy and Investors Edge, so consequently had a mishmash of preferred share holdings. In an effort to build a better yielding, laddered, preferred share portion of my portfolio, I sold all current preferred positions and am planning a ladder with the above noted shares in a non-registered account. These will constitute about 20% of my total portfolio. Do you have any concerns with the choices, or rate resets in general ? I rate resets have not performed well, but the yields are quite attractive.

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Read Answer Asked by Mark on April 03, 2019

• Pembina Pipeline Corporation (PPL)
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Q: Good Morning: I asked this question a couple of days ago but perhaps it got lost somehow. I hold two different PPL preferred shares and rec'd a few days ago an invitation re both of these to vote on whether or not I am in favour of the decision to sell more shares in each. I have to assume the purpose is to raise more capital even though the original no. of shares was probably capped. I confess that I have no idea whether as a current holder this is a positive, negative or neutral prospect. I'm hoping you can shed some light on what's at stake here for me and how I should therefore vote. The prefs in question are ppl. pr. c and ppl. pr.e. Thanks, Don

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Read Answer Asked by Donald on April 03, 2019

• iShares S&P/TSX Canadian Preferred Share Index ETF (CPD)
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Q: Good afternoon 5I.

When I bought CPD I thought it would hold its value better then it has. I did feel better when I looked at your income portfolio I see its down 20% and you still hold it.
What will it take to make CPD change direction?
Do you still feel like its a good position to have in a income account?

Thanks

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Read Answer Asked by Stephen on March 28, 2019

• iShares U.S. Preferred Stock (PFF)
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• Invesco Variable Rate Preferred ETF (VRP)
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Q: Greetings,

i am trying to clean up my US 401K _ i own both of these for income - do i need both and will they act the same?

Thanks

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Read Answer Asked by kelly on March 26, 2019

• Dividend Growth Split Corp. Preferred Shares (DGS.PR.A)
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Q: What do you think of this as a stable short term (matures 11/28/19) income security?

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Read Answer Asked by Tom on March 25, 2019

• ECN Capital Corp. (ECN)
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• ECN Capital Corp. 6.50% Cumulative 5-Year Minimum Rate Reset Preferred Shares Series A (ECN.PR.A)
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Q: I currently hold both.

Re ECN.PR.A
1. Reset Dec. 5 , 2021
2. Rate cannot be less than 6.5%
3. Protection against rising rates, but with rates neutral and/or falling there is an increase likelihood of redemption at $25.
4. Price of Pref. Has trended along with ECN. Cibc has a target of $5.00
5. Reset at 5 yr Canada plus 5.44 (1.523 + 5.44 = 6.963). My book value is $23.57 for a yield of 6.9%
6. Relative to ZPR the price has dropped.
7. I’ve been unable to see the trend on volume.
Question is to make sense of all this, Sell hold or sell half position and keep the cash for other opportunities.

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Read Answer Asked by Roy on March 22, 2019