Investment Q&A

Q: How would IShares Preferred share ETF (CPD) and IShares Convertible Bond ETF (CVD) perform in a rising rate environment?

Thanks, Mike

Q: I need to raise some cash which one can be trimmed today? Thanks.

Q: Hello Peter,

The ETF's above are in the income portfolio. All have different yields that are paid out monthly. My question is, do any of these "dividends" increase over time? Not the yield but the actual payout per share?

Thanks,

Kelly

Q: I'm thinking of switching my CPD to ZPR because the return of ZPR has been significantly higher and the dividend is slightly higher. Curious what your thoughts are. Do you prefer one over the other? Any reason to own both - half in one, half in the other?

Q: Hi Team,
Could you suggest Canadian ETFs of the following sectors for Senior incomes :
1 /Reit 2/ Utility 3/Prefer 4/Bank/Financial 5/Energy.
Please deduct as many question credit as needed.
Thanks as always,
Tak

Q: Hi! I have an ETF portfolio and a portfolio of Canadian and U.S. stocks. I have 10% of my ETF portfolio in Fixed Income given the historically low interest rates. This accounts for about 5% of my overall portfolio which is pretty low. Difficult to add here. I have some XHY and CBO which offset the risks of rising rates somewhat. Should I add to my fixed income portfolio or wait for rates to rise a bit. If I do add, rate reset preferred might be another option or continue adding to CBO and XHY?

Thank you,
Jason

Q: Hi 5i,
What is your opinion of perpetual preferred shares at this time (some utilities and financial companies)? I invested in them last year and have made a modest profit. The profit is nice but the dividend based on my cost base is nice also. I know the growth is limited but do they remain good investments for the next few years considering the economic climate?
Thank you.

Q: I read your article about the correlation between stocks and bonds and it made me wonder whether this was a good or not so good time to purchase them? I read a little more in another article and it said that in the same historical instances, bonds have tended to do well after. Would you agree with this?
I only have room in my margin account so would CVD, CPD, and HAB be giving me interest as apposed to Dividends so there are tax implications?
Thanks!

Q: Would like to create a 10-15 stock portfolio out the securities listed above, to meet my retirement income and growth needs, for a long term hold.
CPD is my current, imperfect proxy for the fixed income portion of my portfolio.
CVE, CNQ, SU would be the only opportunistic (and highly correlated) purchases, to take advantage of the current low valuations for the petroleum industry. These would be sold if the oil & gas market's prospects change.
Please rank all the securities on the basis of return potential over 2-3 years as the primary criteria,
Please eliminate any stock which does not have adequate balance sheet strength, from the lineup.
Please add to the lineup all securites that would facilitate the creation of a defensible, well-diversified, long term portfolio - especially if it is in a sector that I have overlooked.

Thank you for your expertise, and willingness to help me sleep a bit more soundly.

Q: Hi I have this etf in my account . Should i sell some and buy stocks or add some i am looking for dividend income.

Thank you

Q: Hello,
I am nearing retirement. I have CBO, CPD, VAB and XHY at 20% of my fixed income portfolio. All these ETF's exist in my unregistered account. I wanted to add XBB in my RRSP account. Any concerns about too much overlap by adding this position? This will add 7% to my fixed income position. Portfolio analytics recommends a 30% position.

Thanks for all your help.

Q: I am looking for some insight to help me understand how the market is currently pricing preferred shares. I had a position in CPD from 2015 to 2020 when I dumped it out of frustration. During that period it seemed that when interest rates were forecast to go up the preferreds would go down because investors would focus on the lower relative yields. If rates were forecast to drop the preferreds would still go down because then investors would focus on the reset aspect. It was an investment that provided the worst of both worlds!

I still hold a couple of preferreds including some fixed perpetuals such as POW.PR.D and RY.PR.P which despite everyone’s expectation of rising interest rates are both hitting new all-time highs now. It’s all just too perplexing for me. Any explanation?

Q: am a senior looking to invest for income with preservation of capital, do preferred EFT fill this requirement? already own CPD, looking at PGX for US exposure. what other names might fill this requirement

Q: Non-registered account with goal of primarily dividend income has done quite well, with all of the noted holdings nicely in positive territory. In hind sight MG and SYZ would have been in a registered account. SYZ is up 63%, MG 24%.
Overall account yield is currently 3.8%. Would prefer it closer to 5%
Need some help with this "good problem". Take capital gain now and move into yieldier positions, or let running stocks run and deal with bigger gain in future?
If I move out of some of the growthier stocks, which div payers minimum 3% yield to move into?
Overall portfolio diversification is pretty decent, and diversification within this account does not have to be perfect - dividend security within this account is more important.

Thanks,
Jim

Q: Interesting to see one of the preferred shares ETF gaining 'interest' (pun intended) over the past year.
What is your outlook for preferred shares generally and would you step into this area?

Q: Hi!

I used to own these ETFs for my fixed income exposure. I went to 0% fixed income during the downturn last year, instead using the proceeds to buy stocks that were crushed. I'd like to slowly start to build a position again in my RRSP. Am I too early? It seems like rates have started to rise and where they go is anyone's guess, but if bonds have an inverse relationship to rising rates, aren't I setting myself up to lose money? Does a laddered approach negate that somewhat? Maybe its best to start with CBO since its Corporate credit and laddered? How would you rank these in general and in order of which I should accumulate first. I realize XHY is riskier than the others.

Thanks,
Jason

Q: Hi guys
I have a small portion (under 2%) of my portfolio in preferred shares (CPD and PPL.PR.M ). I bought these for a safe steady eady type of return but as you know investing in Preferred shares the last few years has felt like a roller coaster. For example PPL.PR.M is still $1 below where I bought it about 5 years ago, and has dropped to as low as $14. So I am wondering why not sell my preferred holdings and just buy more of a nice dividend stock like BCE where I am actually getting 6.2% yield - more than I am getting from my preferred? I know I am further down the chain if the company defaulted but I also get more upside. Your thoughts on selling my preferred holdings and buying some nice safe dividend stocks instead?

Thanks

Stuart

Q: I have about 5% of my portfolio in CPD ETF. So far it's been a nice, steady-eddie performer with a good dividend. In fact, it's been moving steadily upward for the last year now. But when I look back on its history it has been anything but a good performer. It was almost $20 in 2007 and is now just over $13. Why was this such a lousy investment for so long and what has reversed so strongly in just the last year? I don't see any point in its history when it went up so fast except in 2009. More importantly, is this likely to continue for a while or do you think it will revert to its previous behaviour?

Q: How do you like Preferred's these days? I've recently replaced some of my bond ETF's with ZPR. I understand they carry equity/credit risk but do you see pref's as offering better protection against rising rates? Thanks.

Q: Preferred shares fit into the income part of a portfolio and also can be a fixed income substitute if one can tolerate the extra volatility (especially now given bond yields and potential for rising interest rates). In the past 5i has suggested CPD over DIVS for etf exposure citing the fee differential. Two questions (1) what is your medium term outlook for Canadian preferred shares and (2) given complexity of different preferred share issues and an inefficient market, is there an advantage to the active approach? (Please explain why or why not - thanks).