Investment Q&A

Q: Hello...thanks again for your great support and advise...i have been looking at the zpr and cpd to take advantage of what looks like a movement in the canadian preferred stocks...could you please comment on these two or possibly a better north american etf that covers this area...i believe with increased interest rates these could possibly be a nice area to move fixed income allotment to ....

Q: I own Element EFN in several accounts since $12
I am a small business owner 66 years and still working.
I have cash in my company and some stock holdings and would
consider purchasing efn.pr.e for some income. now at 7.1%

Q: Please comment on the 2nd quarter, just released and the sustainability of the common and preferred dividends, in your view.

Q: I have pretty much gone from thinking I "understood" the investment risks of preferred shares to now a singular emotional thought of "I hate these pieces of $*@#. I am currently looking at a 25% capital loss on the CPD ETF with no end to the bleeding in sight. The yield can't ever come close to compensating for such a large capital loss. I had the apparently misguided belief that a preferred share ETF like CPD would have less volitility and not put my capital at as much risk as an equity. It would seem preferreds combine the worst elements of equities and bonds. My question is where did I go wrong and do you think I would be better off booking the loss and moving on to something where I won't spend so much emotional capital being ticked off. Thanks

Q: could you comment as to why so low, is it a buy

Q: correct me if i am wrong. has the monthly dividend been reduced. if so are you still holding for income. would this be a good entry point or will it go lower when tax loss selling takes hold. stephen

Q: What is your outlook on their preferred issues C, and D , and is it a hold or a sell at this time. Is this a case of be patient and collect the dividend and what would be a worst case scenario for Bombardier. thanks, jean

Q: Hi Peter & Team, additional question regarding preferred
XPF, CPD and ZPR are down 2.67%, 11.54% and 17.26% (12 months)
a) Why such variation?
b) Is it best to buy ZPR since it is down the most?
Thanks

Q: Hi Peter & team, what is your opinion on ZPR for income purposes in a RRIF portfolio? Looking for long term with at least 5% of total portfolio. Thanks

Q: Good Morning: I have been accumulating some preferred shares (both rate resets and perpetuals) now that they seem to be very out of favor. I am currently considering CU.PR.F or G. I'm wondering if you have any comments or insights in regard 1st, to the accumulation of preferreds (up to a maximum of 10% of the portfolio), and 2nd, in regard to these preferreds in particular. Many thanks.

Q: I read the questions recently about EFN.PR.C. Can you explain to me about Element's Preferred shares? The symbols EFN.PR.A, EFN.PR.C, and EFN.PR.E? They are trading below their issue price, and now yield 6.9%, 7.1%, and 7.2% respectively. They reset in a few years. What does this mean? Does it mean they reset the quarterly payout, and how is the new payout determined? Is there a significant risk they would substantially reduce the dividend? Would you consider them a good buy right now, and if so, which series would you suggest? Thanks for your help.

Q: Just to follow up, what happens to preferred shares that are trading below the issue price at the maturity date? Do they keep trading indefinitely under the same terms or expire at zero? Safety of income is fine but not at the expense of the initial investment?

Q: I'm at a loss about what to do with my Element Financial Preferred Shares (EFN.PR.C).

I bought 2k shares at $25.40 for safety and income. The threat of US interest rates rising hurt the price. Then the drop in CDN rates really hurt the price.

I believe the company is well run and I'm earning a nice dividend, but given the shares only move in one direction (down) should I just sell and walk away...a shoebox would have offered a better return. Thanks as always.

Q: Hello folks:

1. I know predicting interest rates has become a dangerous activity now a days. Rate hike prediction hasn't materialised but instead we got Poloz's rate cut.

2. Through my Scotia itrade I get IPO offers for preferred shares. Yesterday I got one from BMO Perpetual preferred share 5 % and one from Canadian Utilities 5.25 %

Worth buying? Of course one can only express an interest and one is not guaranteed to get the shares.

There seems to be a shift from Rate reset to Perpetual Preferred shares recently. At least that is my perception. Furthermore the new issues, (at least on Scotia iTrade platform) are sold out within a day! Especially the issues by Big Banks and solid Canadian companies. Any reason why? Does it mean the smart money is hungry for a solid 5 % yield?

Q: I bought some fairfax preferred (4.75%) a few months ago thinking the downside was limited. However, I am already down about 13%...

I also own the laddered preferred etf ZPR which is down more than 20%.

Can you please explain briefly why they are down so much and what should be anticipated at maturity for the fairfax shares. Thank you.

Q: Can you please comment on FFH series C Pref. The last 2 dividend payments the Pref. paid out was less than the previous 20 dividend payments dating back to Dec. 2009. I did not see any news release stating the Board of Directors voted to reduce the dividend. If their was a news release would management have stated WHY they cut the dividend ? Would we have received something in the mail ? The share price closed at $19.40 today,down significantly from the $25 issue price. I thought the dividends on prefs are pretty much a safe thing.

Q: Since my buy in May, 2013 ZPR is down 23% and continues to get beaten down as interest rates fall. Assuming the Bank of Canada reverses direction in response to the expected rise in US interest rates, is this a good entry point for ZPR as a long term hold?

Q: WHat do you think of the preferred shares at this time?

Q: This convertible debenture's yield to maturity is over 34%. I realize that this is risky company to invest in, but do you think the reward may offset the risk considering the debentures will mature in 17 months on December 31, 2016?

Q: Here's what I just don't get. ZPR holds rate-reset preferreds. I DO understand why a lowering of the bank rate will cause reduction in ZPR's price, as the return on future 'resets' in the portfolio will be reduced. What I DON'T get is how, to date, a total of a mere 1/2 of 1% reduction in the bank rate could explain a reduction of more than 20% in ZPR. Even if an investor would therefore receive 1/2% percent less for five years on the reset shares, that equals roughly a total of 2.5% lost yield over five years. The drop of 20% seems wildly disproportionate to the actual bank rate reductions. Can you explain what I'm missing? And one more question: given that the Bank of Canada will presumably not go below zero, do you not think that this ETF, yielding now 5.1%, has a lot more potential to the upside than to the downside, at least in the longer term? That's the kind of investment I like. Thanks, James.