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Investment Q&A

Not investment advice or solicitation to buy/sell securities. Do your own due diligence and/or consult an advisor.

Q: We’ve owned six rate-reset preferreds for close to 10 years. What an experience! One (RBC) was just recalled. Here’s our present status:
Book Market
BNS..PR.Z $238k $228k $10k
BMO.PR.Q $123k $114k $ 9k
TA.PR.J $125k $91k $34k
BAM.PR.R $121k $76k $45k
ENB.PF.E $112k $75k $37k
I worry less now about our preferreds as our IA predicts most of ours will get recalled. Your thoughts please? I 'think' there's a place in our portfolio for some blue-chip preferreds even if not recalled. Having said that, I still don’t grasp preferreds nearly as much as I should, eg what the principal amounts will be if not recalled. Your thoughts please? The huge gap for three of our five also causes me to worry a bit about what’s happening to retail holders like us. Thanks.
Read Answer Asked by Bill on March 20, 2019
Q: The yield on the issue was 5% ($1.25/share). The reset guarantee minimum is 5%. The trades are now trading at $21. This means the if I buy the shares at this price my guarantee floor is 5.9% ($1.25/$21).
If I am looking for income not dividend growth are some of these discounted prefs a reasonable option?

Thank you,
Read Answer Asked by Robert on March 18, 2019
Q: In regards to the member looking for USD stocks and preferred shares. CIBC publishes a report on Canadian prefs each quarter(I've linked one for example page 27). The only issuers are Altagas and Enbridge

https://www.cibcwg.com/c/document_library/get_file?uuid=56632e8f-3032-4033-9dbb-38354e4253a9&groupId=82580&version=1.0
Read Answer Asked by Rod on March 14, 2019
Q: Is there a publicly-available list of Canadian stocks (including preferred shares) trading on the TMX in US dollars?
Thanks!
Read Answer Asked by Gregory on March 14, 2019
Q: Hi 5i,
Just some additional comments following on Scott’s question about the latest issue of EIF debentures. EIF is a serial issuer of convertible debentures. This issue will likely trade as EIF.DB.K when it hits the exchange and the timing of the issue suggests that its purpose is to fund the redemption of the EIF.DB.G debentures, for which EIF will soon be issuing a redemption notice. The series G debentures have had a 6% coupon and have been trading in the money (share price above $31.70) for a good chunk of the past couple of years. The new issue technically extends this portion of EIF’s debt financing out to the new issue’s maturity date, March 31, 2026. However, anyone considering holding EIF debentures should be aware that they routinely ‘hard call’ their debentures, for an early redemption at par, typically about two years before maturity. For example, the actual maturity date on the series G debentures isn’t until March 31, 2021. To obtain the existing premium, current holders of the series G debentures will need to convert them into common shares at $31.70 or else sell them into the market before the redemption date. Cheers!
Read Answer Asked by Lance on March 12, 2019
Q: Preferreds have slowly recovered however the ones from Brookfield infrastructure seem to be stalled out. Is there something in the set up of these ones that i am missing.

thanks as always
Read Answer Asked by kelly on March 08, 2019
Q: Further to the question on Brookfield prefs, the 5i response likely refers to BIK.PR.A (the Investment corp). I hold BIP.PR.C (Series 3) in a registered account because as can be seen from the link:
https://bip.brookfield.com/~/media/Files/B/Brookfield-BIP-IR-V2/2018-tax/2018%20Canadian%20Taxable%20Income%20Calculation%20Preferred%20-%20Series%203.pdf
the majority of income is foreign. All BIP.PRs are the same and I believe BEP also.
Read Answer Asked by Jeff on March 08, 2019
Q: From your previous advice to other members, I am aware that these securities are best held in RRSP/RIF accounts for tax purposes. My question is whether the same advice applies to each company/partnership for their Canadian dollar preference shares? Are the dividends impacted by withholding taxes and are the shares eligible for the Canadian dividend tax credit.

Thanks
Read Answer Asked by angus on March 06, 2019
Q: I have about 100k to invest and looking for something a little on the safer side so I was thinking of bank preferred shares. Can tell me which reset bank preferred shares you like the best.
Read Answer Asked by Leigh on March 05, 2019
Q: I own a number of higher investment grade perpetual preferreds. They all took a dive in December, but since then my Westcoast and Royal Bank preferreds have risen back to over their $25 issue price. However, my GWO, PWF and even Intact financial preferreds have not. They are all of good credit quality. What do you think accounts for this disparity? I may buy more of the losers.
Read Answer Asked by Pat on February 28, 2019
Q: Can you explain to me this preferred share,and why this one is down so much.
How can they act so totally different than the common shares?what are the chances they are going to be called.will that be for $25 if this happens?
When and how are they gonna be resrt?
Is this a preferred share you like,or any others?
The company and dividend look very enticing
Read Answer Asked by Josh on February 27, 2019
Q: Thank you for your answer to my first question. The GC 5yr rate in March 2018 was 2% and the pref. was set at 4.38%. Would you expect the 2023 reset rate to be similarly higher, since the minimum rate is "not less than 80% of 5yr GC yield", which suggests a very low minimum rate assuming rates are are still around 2 to 2.5% - the current GC rate is 2.25%?
Read Answer Asked by David on February 27, 2019
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