skip to content
  1. Home
  2. >
  3. Investment Q&A
You can view 3 more answers this month. Sign up for a free trial for unlimited access.

Investment Q&A

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

Q: Lots of questions to 5i on prefs lately. Some possible are explanations are in a recent article by John Heinzl: "Why preferred shares plunged."
https://www.theglobeandmail.com/investing/education/article-why-prefs-plunged-and-the-acbs-of-the-loblaw-deal/
You can add indiscriminate dumping of issues by CPD,ZPR, and HPR on high volume days as they struggle to keep up with net redemptions. The bid/ask spread on these ETFs is far less than most individual issues, so investors look to them for liquidity.
Read Answer Asked by Jeff on November 26, 2018
Q: I own the 5.10 percent minimum rate reset preferred shares (Bpo.pr.e). Are these dividends available for the Canada dividend tax credit or if not how are they taxed? Thanks,Brian
Read Answer Asked by Brian on November 23, 2018
Q: I am retired and own GMP Capital preferred series B in a non-registered account for income. How safe do you think the dividend is? I was encouraged when they recently re-instated the dividend on the common shares, suggesting management confidence in ongoing profitability, yet the pref B price continues to trend lower. Why?
Read Answer Asked by David on November 23, 2018
Q: Why the sudden drop of preferred reset shares?
Thanks
Read Answer Asked by Terry on November 21, 2018
Q: When one reads the balance sheet are the pref shares included in the long term debt.
Read Answer Asked by Leon on November 21, 2018
Q: Hello 5i Team, I am having trouble understanding the recent behaviour of preferred shares in general. I would sooner not repeat the loss I took several years ago, and until recently had thought my current set-up was “safer”. However, I am now in danger of heading underwater on all but BCE in the following list. Do you see any “red flags” in these holdings going forward that might signal Sell?
BCE.PR.H (Ser AH)
BPO.PR.N (3.782% CUM 6.5 YRRY)
FFH.PR.G (3.318% CUM 5 YR RT RST)
BEP.PR.K (5% CUM MIN RT RST)

I note that CPD has also been moving down more or less in concert with my individual holdings.

Would appreciate your thoughts/insight here.

Thanks,
Read Answer Asked by Stephen R. on November 20, 2018
Q: HPR has dropped from the 9.60-9.70 range to below 9.00 in the last while, including yet another big drop today. I always thought a managed Pref ETF would not drop as much as the overall market during a correction and that it would be a defensive holding. Apparently not a correct assumption. So, what is happening with this ETF - should I sell and buy something more secure like a Utility, buy more of this ETF or what? My goal with this part of my portfolio is lower risk.
Read Answer Asked by David on November 19, 2018
Q: Goodmorning
What are your thoughts on the 2 above preffered shares?
continue to hold or move on?
Thks
Marcel
Read Answer Asked by Marcel on November 19, 2018
Q: I own CPD in an OPEN account. I am still trying to understand Preferred Shares, even after watching Ryan's very good presentation about it. I am still trying to figure out why the fluctuations in CPD, outside of bond yields, and interest rate fluctuations i.e. should I sell these now for Tax loss selling or keep and buy more perhaps. It might be helpful for me to understand how I can buy an individual preferred share in my TDInvestor account, then I could see the difference in share price to common? A few questions here....
Thanks
Marilyn
Read Answer Asked by Marilyn on November 09, 2018
Q: Hi Guys: I hold an Altagas Preferred (ala.pr.e) which is down significantly over the last year. I hold it principally for the yield so I am not too bothered by the drop, unless of course I begin to believe that the company will have to default on its debt obligations. This seems (to me at least) a pretty unlikely scenario, notwithstanding all the current drama with its debt and stock price etc. Please give me your opinion in this regard. With thanks, Don
Read Answer Asked by Donald on November 01, 2018
Q: I purchased ECN.PR.C at $25 because it paid 6.25% and, as a rate reset in a rising interest rate environment, with a guaranteed 6.25% minimum(!), it sounded great.
It has gone down from day one and has little interest. Should I pick up a few more shares at $21 with a juicier dividend or let it go and look elsewhere? If it doesn't go up with increased rates, when will it?
Thanks.
Read Answer Asked by Steven on November 01, 2018
Q: My question relates to the latest type of prefs , the minimum rate test preferred. As a broker who has been retired some time.i am knowable about the rise and fall of prefs as they relate to rising or falling interest rates. But I struggle with understanding the minimum rate reset prefs. For example ECN.PR.A pays a 6.50 % div based on issue price. Given the current 5 yr rate the reset would be above the minimum rate. No matter what you would get 6.5%.
I know that other factors influence the trading price eg quality and the market itself etc.
Is this type of investment , all other things being equal that you would buy for the short as well as long term. I’m a very senior senior.
Read Answer Asked by Roy on October 31, 2018
Q: Hello,
The ALA.PR.U preferred has fallen like all other ALA shares.
If they cut the dividend on the common, could they just as easily cut the dividend on the preferred?
My intentions are to generate USD income and still take advantage of the dividend tax credit.
Would you suggest I hold off from averaging down?
The yield (in USD) is appealing. Thanks
Read Answer Asked by Carlo on October 31, 2018
Looking for more? Sign up for a FREE 14 day trial! No credit card required

We invite you to sign up for a 14 day free trial of 5i Research!
Experience all the benefits and tools we have to offer; stock research, model portfolios, Q&A with our experts, and so much more. Join a community of like-minded investors today!