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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: By complete luck I bought a good chunk of aurora a couple days ago which played off nicely yesterday and today. Any idea why the big jump? Also I have been reading and this article just came out. https://www.newcannabisventures.com/aurora-cannabis-converts-remaining-2018-debentures/

I don't fully understand everything in it. So bassicly they will be converting debentures into more shares? Does it effect your current shares? It's good right?
Read Answer Asked by Michael on November 08, 2017
Q: Hello 5i,
Which preferred do to you prefer? Pardon the pun.
I'm seeking USD dividend income from Canadian companies to take advantage of the div tax credit. Can you suggest other vehicles or strategies to achieve this?
Are these perpetual or rate reset? With rates increasing, why aren't these going down in value? The yield seems to be north of 5%. Any obvious risks I may be overlooking?
Thank you.
Read Answer Asked by Carlo on October 31, 2017
Q: Since 5i is not averse to the preferred shares of split corps, here are some notes that have been gleaned from the Quadravest website, listing the ticker symbols of several (not all) of their preferred shares and the approximate dividends:

LFE.PR.B - 6% dividend with no suspensions ever since 2006
DFN.PR.A - 5% dividend with no suspensions ever since 2004
XTD.PR.A - 5% dividend with no suspensions ever since 2009
BK.PR.A - 5% dividend with no suspensions ever since 2006

FTU.PR.B and XMF.PR each suspended dividends for nearly a year during 2009-2010.

I believe DFN.PR.A has the longest history of paying dividends and also the most diverse holdings. Its chart since inception is mostly breathtakingly level, though it lost nearly 30% in 2009-2010.
Read Answer Asked by Jerry on October 30, 2017
Q: I have read that the Fed dot plots are showing a 3% Fed Funds Rate within three years. That should imply a 10 year bond rate of 4% to 5% at that time. If so, would that be negative for bond proxies such as utilities, pipelines. telcos and reits? What about high yield corporate bonds? Should we stay away from rate sensitive investments and concentrate of growth stocks? I am a retiree with a need for income.

Thanks
Read Answer Asked by Hans on October 30, 2017
Q: Hi 5i team, I know that you are not promoting market timing but I was just wondering what your thoughts are on the following; I am a young retired person with most of my financial needs met with my defined benefit pension. My investments are 100% in equities as I consider my pension to be the fixed income portion. Where the market has been so strong lately and with no recent correction do you think it would be wise for a conservative retired income investor to take approximately 25-50% of his investments and purchase good quality rate reset preferred shares with the belief that during a period of extreme volatility and market correction that these instruments would be affected far less than common shares? The only preferred shares I hold currently is ECN.PR.C. Please tell me if you believe my logic is flawed and if it is not could you recommend a few other good yielding preferreds or other instruments you believe would hold up well during volatile markets. Thanks again for all you do. Mario.
Read Answer Asked by Mario on October 25, 2017
Q: Hi, since the end of Sept. TD.PF.B price has risen by 5% & RY.PR.H by 7%. When purchased TD.PF.B interest rate was 3.8% & RY.PR.H was 3.9%. Their 5 year interest re-calculation date is 2019. During that same period ENB.PF.E price has risen by only 2.5%. At purchase ENB.PF.E interest rate was 4.4% & it’s 5 year interest re-calculation date is 2020. The present dividend yield of ENB.PF.E is 1% greater than the two bank preferred shares. My question is, do you have insight as to why the bank preferred shares have performed much better than the Enbridge preferred shares since the end of Sept. Thanks … Cal
Read Answer Asked by cal on October 16, 2017
Q: I am retired, living on dividend income and looking for more yield to supplement my income. Thanks to 5i, I recently became familiarized with covered calls and chose ZWU yielding 6.5%.
Now I am interested in Debentures. I recently read in 5i Q&A a question on CSU.db debentures that guarantees 6.5% plus inflation rate to yield 7.5-8%, and your response was that it's a quality security.
Regarding Debentures, are they simply traded like a regular stock with scheduled dividends paid that can be bought and sold as I see fit without penalty?
Debentures seem like a low risk way to get a higher yield as the price hardly seems to fluctuate. Is this an accurate assumption?
Would you recommend for an income investor to invest 5-10% of portfolio into 1-2 debentures for higher yield? If so, can you recommend 1-2 that look most attractive for a 1-2 year hold?
Read Answer Asked by Curtis on October 13, 2017
Q: I recently read a recommendation to sell rate reset preferreds because "the 5 year GOC has moved too far too fast from 0.40% one year ago to 1.80%+ now." They further worried that upside is limited from here, and downside is huge if there are no buyers.

I thought that we seemed to be in a period of rising rates and that a laddered portfolio of rate reset preferreds was a healthy option for part of one's portfolio, given a desire for some income. I'd appreciate your thoughts. Thanks in advance.
Read Answer Asked by Bill on October 02, 2017
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