Investment Q&A

Q: Peter; I was interested in buying this Pfd. after reading the question and answer today but when I checked the offering info it says the reset is based on the 90 day Tbills, not the five year Canada's. Is that right? Thanks.Rod

Q: Just issued NVCC Fixed reset 6.25% GC5+547bps

Can you comment on this issue. Particularly the viability component and the Credit quality o the Bank

Ernie

Q: Morning Peter & team,
Looking at I5 Income on CPD now down a lot still with 5% yield, it seems a fairly good holding for my TSFA.
Your idea is very appreciated.
Tak

Q: I bought the Canaccord preferreds about a year ago. As usually happens, the price of the preferreds went down with the normal stock, to the extent that the yield is now around 15%. Is this yield safe? Can I add to my holdings while I wait for CF to recover?

Q: Recently read an article in Globeinvestor entitled "It's time to check out the dazzling yields of Canada's big bank preferred shares" a recent offering from them pays a dividend of 5.5% and after 5 years is reset to 4.8% over the 5 year Canadian bond rate. My question is what would the symbol be or how could I purchase this,I trade online and that's the vehicle I would like to purchase them through,appreciate your answer ..thanks

Q: Wandering if you could help me out,these preferred shares are advertised as 5.5% dividend,but when I go to my BMO Investorline account or Globeinvestor it shows 0% for dividend and no ex date.any help on how often the dividend is paid and why it shows zero.This is a new offering in early March has had respectable volume and done well appreciate your information thanks

Q: Interesting article in the Globe this morning, suggesting to consider the newly issued preferreds with 5.5% + yield, some with 4-4.8% reset rate. Also, that buying individual preferred is a better choice than the ZPR. Can you suggest some of your choices please.
J.A.P. Burlington

Q: Peter; Would this ETF be buying the " new" bank issued preferreds.

Plus re the " egg on your face" comment I would ask David to watch BNN Market Call guests explain their Past Picks , some down 25-75 %. If every stock 5i picked went up they would be under investigation !
Keep up the good work . Publish if you wish.
Rod

Q: RBC and a number of the other banks have recently issued preferred shares(series BM ?) where the dividend rate will reset every five years at a rate equal to 4.80 per cent over the 5-year Government of Canada bond yield. Do you think these are a good buy for income and safety? If yes are they available now and what is the symbol of the Royal Bank version ? Thanks Ken

Q: Further to Charlie's question, does this US acquisition spree and it's debt, change your view on the quality of Fortis preferred shares.
Would you own them for income?

Q: I had sent you a question last week about accepting the offer to convert to the new series preferred shares and wonder if I misunderstood you now. I did call the discount broker and told them that I would tender my preferred shares to the new series as the deadline was March 15 and then on Friday I received another notice that I could get $20.00 per shares in Cdn funds or US funds equivalent to $20.00 CDN. I called back the discount broker and told them that I wanted to take the US funds but was told that I could not because I tendered to the new series. Would this be correct? Should have I not received both options at the same time? I am wondering if you meant that I should tender to the offer price and not to the new preferred share? Normally when I get a take over I sell into the market to avoid all the confusion that can happened. I know that I can still sell into the market and most likely will but just wanted you answer on this situation.Should I call the trust company handling this transaction to see what their answer is?

Thanks
Dolores

Q: Hi recently CPD has dropped so much, so my first concern is why. Secondly, since it is a preferred shares ETF, I thought it is very low-risk (dividends paid before common shares)and I suggest my parents to use their line of credit (interest rate lower than 3% annually) to buy it for retirement (use the monthly distribution to pay off monthly payment). Simply put, borrow money to invest in CPD. Let me know your views on my thinking and please be specific. Thank you very very much !!! Tony

Q: Our kids are now going to post-secondary school, so the RESP will be drained at a rate of 25% annually. With these fixed needs, what is an appropriate stable holding? The portfolio is 75% preferreds that have held their par value (GWO.pr.p IGM.pr.b POW.pr.c) but I am concerned they may not hold their ground for the next 4 years. The remainder is in a Cdn Balanced fund.

Q: Do you know how one would go about purchasing Fairfax "7.375% Senior Notes due April 15, 2018" (they don't seem to be listed in TD's quote system)? Also, could you please explain what "Senior Notes" are and what level of risk they have i.e. riskier than equity, preferred's etc. Thank you.

Q: I own some of each of these Pfd's...one has the symbol BM in it's name, the other BK...would you be kind enough to make the distinction for me , please and thank you...also if you would comment on their credit quality ...and whether the reset rates in 5 yrs time is the minimum rate or whether the rate is reduced if we have negative interest rates...many thanks ...cheers

Q: I currently owed some Rona preferred shares and now that the circular is out what you do think someone holding these shares should do?If I wish to convert to the new series I must let my discount broker know.I did buy at a lower price so I am not in a loss position.I hold these shares in my RRSP. If the ex-dividend date is March 14/16 and I sell the stock after March 14,would I be entitled to the dividend?
Thanks
Dolores

Q: Hello great team,
I own some split preferred FFN.pr.a. I am OK with 5.25% dividend and my understanding is that my principal investment and dividend are safe as long as NAV value of the unit remain above $10. Current NAV is ~$14. Are there any other risks (e.g. management) in losing my principal of $10 per preferred share other than drop in NAV value less than $10. Overall, what do you think about this preferred? DBRS rating is 4 high. The fund is managed by Qudravest Capital Management. I will appreciate any alternate suggestions to this preferred share? – I am OK with 5% return and safe principal.
Thanks

Q: I currently own these 2 series of preferred shares, I am up on both, it was the high yield that attracted me,knowing at the time that it was almost a binary outcome, rolled the dice. I feel that at the end of the day that the Feds will give them some more money ( I personally don't think that the government should fund such companies) my question is what is the worst case scenario if they get these funds? in other words how much more time does this buy BBD. and their ability to fund their debt obligations. I sometimes feel like a fly being drawn into the light with the attraction of the high yield

Thank-you and have a nice day

Auftar

Q: I'm looking to add some exposure to the preferred sector. It would be primarily for income and portfolio stability, but an opportunity for capital gains over time is also important. Horizon would be at least 3-5 years. Do you have any recommendations for specific issues or for good ETFs? Thanks.

Q: I have option to transfer series 1 preferred to series 2. I have pasted the announcement to provide all the relevant info. Could you please let me know if I should convert to series 2. I will appreciate your response ASAP since I have to make decision soon.
Thanks and kind regards,
Tarun


First National Announces Dividend Rates on Cumulative 5-Year Rate Reset Class A Preference Shares, Series 1 and Cumulative Floating Rate Class A Preference Shares, Series 2
2016-03-02 10:00:00 PM ET (CNW Group)




First National Financial Corporation ("First National") (TSX: FN, TSX: FN.PR.A) today announced the applicable dividend rates for its cumulative 5-year rate reset Class A Preference Shares, Series 1 ("Series 1 Preference Shares") and cumulative floating rate Class A Preference Shares, Series 2 ("Series 2 Preference Shares").

With respect to any Series 1 Preference Shares that remain outstanding on March 31, 2016, commencing as of such date, holders thereof will be entitled to receive cumulative preferential cash dividends on a quarterly basis, as and when declared by the Board of Directors of First National. The dividend rate for the five-year period commencing on April 1, 2016, and ending on March 31, 2021 will be 2.79%, being equal to the 5-Year Government of Canada bond yield determined as at 10 am (Toronto time) March 2, 2016 plus 2.07%, as determined in accordance with the terms of the Series 1 Preference Shares.

With respect to any Series 2 Preference Shares that may be issued on March 31, 2016, holders thereof will be entitled to receive floating rate cumulative preferential cash dividends on a quarterly basis, as and when declared by the Board of Directors of First National, based on a dividend rate equal to the 90-day Canadian Treasury Bill plus 2.07% on an actual/365 day count basis, subject to certain adjustments in accordance with the terms of the Series 2 Preference Shares. The dividend rate for the period commencing on April 1, 2016 and ending on June 30, 2016 will be equal to 2.532%, as determined in accordance with the terms of the Series 2 Preference Shares.

Beneficial owners of Series 1 Preference Shares who wish to exercise their right of conversion should communicate as soon as possible with their broker or other nominee and ensure that they follow their instructions in order to ensure that they meet the deadline to exercise such right, which is 5:00 p.m. (Toronto time) on March 16, 2016