Investment Q&A

Q: Hi 5i,
Regarding the preferred shares of ECN and the proposed sale and $7.50 dividend. This might be to simplistic, but here goes. ECN is selling the First Service division for $2B US. Paying out approximately $1.5B with the $7.50 dividend. Leaves $500M US. The preferred shares outstanding are approximately 7.6 million units of A and C issues. Total redemption value at $25 would be $190M Cdn. Their 5 year anniversaries are coming up on December 31, 2021 and June 30, 2022. With coupon rates of 6.50% and 6.25% on the prefs, I would think there would be redemptions coming using the proceeds of the sale and do any refinancing with cheaper debt.
What are your thoughts on the above scenario?
Thanks for all your professional insight and advice.

Q: I hold ECN and ECN.PR.A in a registered account. After reading recent comments I am considering selling the preferred shares to buy more of the common. Would you endorse this move? I also have a small preferred position in a taxable account with a 55% gain. I expect you would advise holding in this case. Is that correct? Thanks as always for your exceptional service.

Q: ECN.PR.A will reset Dec. 31/21 at 5.44% over the yield on 5 yr Goverment of Canada bonds , but not less than 6.5%.
On a total return I’m down 14.7% given the current price of $14.40. The current yield is 11.25%. It makes up 7% of my portfolio.
I’m considering averaging down to 10% of my portfolio.
My thinking is that with the very low interest rates it will make more sense for the preferred to be redeemed, since they will be able to raise funds at a lower rate in the market. My second thought is that looking forward to 2021 interest rates could be on the rise. Third the preferred is trading a huge discount .
Is there any overriding reason not to do this I.e. value of underlying shares ECN Common???

Q: I have the following securities in what I consider a balanced portfolio. The fixed income portion doesn’t show here because it consists of OAS. CCP. Plus two other pensions.
I’m thinking of sell part position in MMX ( small loss);and ARE to realize a capital loss while at the same time raising some cash for the next pullback. I like TFII . We need to keep the food chain moving. Trucking an important part . The other is cargo jet. Am I on the right track . Your opinion. Or would you look elsewhere given the current holdings.

Q: I hold the above equities. I have additional funds to allocate. Your suggestions please. Take this opportunity to thank Peter for a great job, very reliable.
I would not want to add to my positions in ECN.PR.A , ENB, PNG ,& LSPD because of weighting’s and/or risk.

Q: Do you have an explanation why ECN.PR.A is trading below par? I would have thought with its 6.5% guaranteed coupon rate that it would not be trading below par.

Q: I hold the above stocks in my portfolio. Thinking of adding QSR. Your thoughts. Or should I keep my cash for better opportunities during tax loss period ? BEW and PNG are my play money. Playing PNG with house money.

Q: Would you have an explanation on why this security has performed so poorly? I would expect with its 6.5% minimum guarantee on its dividend that the preferred shares would be trading close to face value ($25.00).

Q: In reference to my last question you made a couple of suggestions. I parted ways with CHR and NFI. You also suggested that I lacked diversification in some areas. I have accumulated cash since my last question to be deployed at an appropriate time. I have listed again the stocks in which I am currently invested in. Percentage allocation in each was listed in my last question. I have wonder if you maintain an investment profile of your clients. Doing so would enable you to provide more appropriate advice and/or suggestions. It would negate the need for clients to keep repeating investment objectives. Thanks

Q: Enb in my portfolio has a book value of $42.16
And a yield of 7%. It now represents 10% of my portfolio. This my largest position in a portfolio of $630000. I generally buy for dividend and growth. Maybe I should reduce my position in ENB and take a 5% position in another dividend paying stock with growth potential. eg. CM or other opportunities. Any suggestions.

Q: I currently hold both.

Re ECN.PR.A
1. Reset Dec. 5 , 2021
2. Rate cannot be less than 6.5%
3. Protection against rising rates, but with rates neutral and/or falling there is an increase likelihood of redemption at $25.
4. Price of Pref. Has trended along with ECN. Cibc has a target of $5.00
5. Reset at 5 yr Canada plus 5.44 (1.523 + 5.44 = 6.963). My book value is $23.57 for a yield of 6.9%
6. Relative to ZPR the price has dropped.
7. I’ve been unable to see the trend on volume.
Question is to make sense of all this, Sell hold or sell half position and keep the cash for other opportunities.

Q: Has a dividend investor I hold shares of the above in in my registered and non registered accounts.
I have cash over and above my fixed income position. This extra cash is earmarked for a new position in a dividend stock paying a 4 to 7% div with growth prospects and at fare value and tax efficient. Might be a tall order , appreciate your help.