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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: I cannot fathom why investors would buy rate reset preferreds when the resets will virtually all significantly lower their current dividend. The MINIMUM rate resets, to my mind, are the only preferreds to buy and there are many good companies paying between 5 3/4% and 7% and this rate will not drop. Additionally, if and when rates increase they could be paying an even higher dividend. No one seems to ask about minimum rate resets! Am I missing something?
Thanks
Phillip
Read Answer Asked by Philip on August 04, 2020
Q: Just reading about the new limited resource capital notes (LRCNs) that RBC is issuing to institutional investors at 4.5%. Since these pay interest, they are better for the banks than equity because they can deduct interest payments but not dividends. For investors, dividends are preferable from a tax point of view but I am wondering if banks are going to try and reduce traditional preferrred share offerings and issue more of these LRCNs. This is probably why preferreds have gone up recently. How do you see this playing out?
Read Answer Asked by Maria on July 27, 2020
Q: I have no exposure to fixed income and wanted to know if there are any other that you were preferred over this list? I am looking at buying all of these names each for a 5 % weight.

Thanks
Read Answer Asked on July 23, 2020
Q: I have a LIF consisting of these four. ENB at 15%, AW.UN, CPD and SIS all at around 27%. I will need to trim one or more for my annual withdrawal. Would you have any thoughts on the best candidate for a trim? Thanks as always for your advice.
Read Answer Asked by Frank on July 02, 2020
Q: Hello 5i Team
Is there a website where I can download the CUSIP and/or ISIN for Canadian Preferred Shares and/or other securities?
I am trying to analyse the holdings of CPD/RPF/ZPR and each one presents the holdings with different information (CPD has the CUSIP, RPF has neither, ZPR has the ISIN), none of them indicate the underlying TSE stock symbol and the security description is extremely truncated (mostly company name).
Some of the company websites have the CUSIP and/or ISIN, however the majority do not. Short of emailing the investor relations department do you suggest any other means?
How successful are you in receiving answers from investor relations representatives?
Thanks
Read Answer Asked by Stephen on June 30, 2020
Q: My income portfolio consisting of the above equities has taken quite a beating in the recent market downturn. Except for LB, there has been some recovery in prices, and so far dividends have been maintained. I have some excess cash to deploy, and would like your advice on whether to double down on some on my current investments, or your suggestions for other beaten down income investments. Thank you.
Read Answer Asked by Jean on June 12, 2020
Q: 5i Hello,
I have these EFTs on my RRSP and not feeling happy with them, can you suggest some possible candidates I could switch to, or just sell them all and with profits buy CSU LSPD SHOP GOOG AMZN.
Thank
F
Read Answer Asked by Fernando on May 21, 2020
Q: I have both these 2 ETF in a RRSP account but at a 3 % weight each.these 2 ETF. I will not need to start withdrawing for 10 years and wondered if I were to buy more for a 5% weight , buying 1 % now and then another 1% in a few month or best to wait longer to see if these 2 ETF start to perform better?
Thanks
Read Answer Asked on May 13, 2020
Q: I'm trying to make decisions for my retired mother's taxable account.

In the current environment, do preferred shares make more sense than bonds or other fixed income strategies? If so, can you recommend a few of the best preferred share funds (or would an ETF like CPD or ZPR be a wiser option)?
Read Answer Asked by Kevin on May 12, 2020
Q: Can you comment on these ETF's I presently hold in a corporate unregistered acct. I have a large amount in DVY.US - not sure why (previously with a FI ) Looking to update this portfolio based on present times. In At least a 5 year hold. Please take as many credits as needed.
Thanks so much.
Read Answer Asked by lorraine on May 05, 2020
Q: France is starting to see food inflation. In some cases, it's quite impressive numbers percentage wise. If we do get more wide-spread inflation, due to the massive stimulus, would that be a positive for preferred share resets, which I've read go up with higher interest rates? The ETF ZPR currently pays 7% annually, which is usually a sign of future cuts, but on the other hand, it's been going up for 3 weeks. This question is for an account that is 60% in bonds and needs more income.
Read Answer Asked by Matt on April 28, 2020
Q: I hold this in my Cash account (for income) and it is underwater (has been for a while). In your opinion, would I be better off to harvest the loss and purchase 2 or 3 individual top quality preferred shares? If so, can you provide some specific suggestions (I am overweight financials). I assume I would have to wait 30 days to purchase the individual shares to avoid the superficial loss?
Please deduct credits as appropriate.
Thank you.
Read Answer Asked by Carlos on April 22, 2020
Q: Good Evening
RATE RESET PREFERRED SHARES
The interest rate on rate reset preferred shares is set every five years by adding to the spread the interest rate of the 5 years Canadian government bond.
What happens if the the 5 years government bond is set at a negative rate?
For instance, the interest rate spread on BAM.PR.Z is 2.96%.
On December 31, 2022 a new interest rate will be set for BAM.PR.Z. Lets assume that the interest rate on the 5 years Government bond is negative on December 31, 2022 at -.5 %.

Will the new rate on BAM.PR.Z be 2.46% (2.96 minus .5) or will be set at 2.96% ??
Thank you for your help during these difficult times.
Read Answer Asked by Terry on April 20, 2020
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