Investment Q&A

Q: Hi Peter & Co.,
I own 3000 shares of BRF.PR.F, preferreds which pay $1.25 each annually, or 5% of the original issue price.
Brookfield has offered a share exchange in which I would receive one new Class A, Series 5 preferred share unit for each of my current shares. The new units would pay 5.59% annually. Sounds good at first glance, but I am wondering why the company would do this, and whether there are other features of the new Class A, Series 5 units that are less desirable. My original cost for my shares is $19.84 each.
Can you comment please? Thanks!
Brian

Q: I was thinking of buying this ETF for my RRSP. RRP shares which are laddered - down a lot due to concerns about interest rates I assume - however, these type of preferreds would benefit from a slow increase in interest rates in Canada when that happens - rate reset means increased payouts. I think this would be a better bet than the CPD? Big potential for capital gains and get paid 6% to wait.

Q: Preferred shares have taken a killing this year, but is it overdone? Will preferreds be ready for a bounce next year? If so,
would ZPR be a good way to play the preferred shares market?

Q: I am wondering what your impression of TransAlta Preferred shares (TA.Pr.D, TA.Pr.F,Ta.Pr.H,TA.Pr.J). They are paying a nice dividend and I am wondering if it is save?

Q: The MInimum Rate-Reset Preferred Shares BEP.PR.G, ALA.PR.I, BAM.PF.H, CU.PR.I seem almost to good to be true. They offer rate resets that are a 100 bps or higher than the previously issued rate reset shares of the same companies as well as a guaranteed yield of 4.5 to 5.5%. The only caveat I have been able to find is that the distribution is projected to be composed of 50% eligible Canadian dividend, 25% income and 25% return of capital (http://prefblog.com/?cat=14). How and when would the return of capital be taxed in a non registered account? Would the return of capital diminish the redemption price of the shares? What percent of a fixed income portfolio would allocate to this type of security?
Thanks David

Q: Can you explain why U.S. preferred share ETFs like PGF and PFF have considerably outperformed their Canadian counterparts such as CPD and ZPR ? Thanks, Joe

Q: I am considering buying the new Westcoast minimum rate RR issue once issued. Because it is owned by Spectra and just has pref shares O/S I have had difficulty finding much on financials. If possible, could you please comment on creditworthiness, safety of pref dividends and payout ratio if possible. Would you recommend it for very safe income. Thanks.

Q: good morning....hap snedden recommended this etf...I like to put away money in my rrsp everytime that I have a years income in profits...I am 6 years from retirement and would this be a good place to store future income until needed...thank you for a great service.

Q: Hi
I am looking at adding a preferred share but do not know a lot about preferred shares. What are your thoughts on BPO series T.
thanks
Joe

Q: Some preferred shares have been recently introduced which establish a floor to stabilize their returns.Can you comment on the pros and cons of these shares and suggest a couple as possible investments. Thanks, Joe

Q: If Capstone gets bought out, will the preferred shares be bought out at $25? They are trading at $12.70 now, and yielding 9.8%. Am I missing something?

Q: Hi, 5i team,
Just wondering what your thoughts are regarding investing in TIPS, Treasury Inflation Protected Securities in the USA?
Thank you

Q: Why has cpd been so volatile lately?
Never been so volatile before.
Is this a good entry point here?

Q: They are offering to swap these share for share in a new entity they are calling Brookfield preferred "Units" as opposed to shares, upping the dividend slightly. Is this a good deal, and more importantly would the "Units" be tradable on the TSX? I am not underwater on these, and I am getting roughly 6% on my original investment, any need to do the trade or will it eventually be mandatory. The language in their prospectus is confusing.
John

Q: Just a comment related to the questions of Jeff and Brian: It appears that this issue is eligible for the dividend tax credit, as it is from a Canadian company (and traded on the TSX). This makes this US-dollar pref all the more appealing.

Q: A followup on the answer to Brian's question: the 4.74% reset rate is on the issue price, $25, correct? That would mean that the issue would pay $1.185 US dividend, more than the current $1 US. So with the current 5.2% yield expected to lift to 6.1% based on the current $19.20 SP, that makes these ENB US$ issues attractive buys, particularly with US interest rates expected to rise, does it not? Thanks, J.

Q: hi again;what would be todays reset rate be if it was now and not on june 1 2017 5yr usg yld+3.05% thanks again brian

Q: What do you think of their Rate reset Pref Ser7. 5.5% is their offer. Came through Scotia iTrade. May not get the quantity that one requests. Worth buying? Safe for 5 years?
On an another note, I know that they will return the original 25 $ in 5 years even if it goes down. But what if the shares appreciate?

Q: Thank you for your earlier answer to my question related to these types of funds! But it leaves me with one follow up! In a tax sheltered environment (RRSP/TSFA) is an ETF focused on preferred shares a good choice for fixed income. From my readings, preferred shares ETF seem to be better suited to an un sheltered portfolio because the 'interest' is treated as a dividend for taxation purposes.

Would I be better off in a tax sheltered environment to purchase bond traded funds such as PSB or XSB? It this is a better option which would you choose? With the prospects of rising interest rates in the USA, would I be wise to mix in some US Corporate bonds as well, such as USB? If this is a better option would a 60/40 split (USB/PSB) be a good split?

Thanks again!!

Q: Is now a good time to establish positions in a preferred share ETF? Is there a significant difference among the various funds available (ie: CPD, PPS, ZDV or the National Bank Preferred Equity Income Fund - sorry could not find the symbol)? With interest rates likely to increase, how stable are each of these funds and if it is a good investment (1 to 3 years) which would you recommend? Please indicate how you would rank these funds for performance.

Thanks