Investment Q&A

Q: I'm not really a preferred share investor because I don't really understand the various nuances of them. I understand the difference between perpetual, reset, etc but not the finer points.... And I only bought them because no one knew what was going to happen with the Covid crash and I happened to be 30% in cash ..... My reasoning was if the blue chips can't cover their preferred dividends it's the end of the world and I may as well head down to the harbour, steal a tugboat { I'm a retired tugboater } a barge full of beer and head north with a fishing pole ..... My preferreds have returned 70% plus dividends for me and I am thinking of exiting . My problem is they keep rising and I don't understand why . BAM.PR.B was over $18 in 2018 and currently yields 3.1% at a considerably lower price ..... ENB.PR.H is not nearly as far off of it's 2018 price so I'm guessing there are differences between the two in spite of the fact they are both " resets " ..... I'm planning on selling both but there is no rush . So the question is why the rise ? Is there current potential to for BAM.PR.B to return to 2018 prices or even rise more at all ? ......And why is there so much of a difference in 2018 to today's prices between the two preferreds ?

Q: Thank you for your explanation of floating rate versus fixed rate preferreds with my two examples of BAM.PR,B and BRF.PR.E. { I assume by fixed rate you mean perpetual } ..... I don't really understand the preferred space but have been researching the effects of the virus crash versus these stock prices. Overlaying the price pre crash on the various kinds.... Perpetuals had a little drop and climbed back to close to where they were. Whereas fixed rate resets and floating rates fell between 20% and 40% and are still down there. Well we all know interest rates aren't going up any time soon and it sure looks to me like there isn't a lot of room to fall. Two I'm looking at are FTS.PR.I a floating rate preferred and ENB.PR.H a fixed rate reset preferred.... I'm trying to understand why they were hammered so badly when realistically interest rates don't have much room to drop . I'd still be getting the interest rate based on the stock price which would be close to 10% on one and 7% on the other less whatever the amount of the interest rate drop is wouldn't I ? . What is the investment theory that made them correct so much ? And what market conditions would exist to gain back those losses ? ...Visually it looks to me like in the case of the Enbridge product if interest rates were to drop a half a percent my yield would drop from 10% to 9.5% ..... I know there is something I'm not grasping here . I just don't know what it is . Thank you for your guidance through these financial conditions.

Q: Hi 5i: I hold ENB.PR.Y; ENB.PR.H and FFH.PR.K in my RRSP all of which are down over 50 per cent but have provided some income. In total they represent about 2.5 percent of my portfolio.Given the fixed nature of this payout and my little interest in preferred shares, I am wondering whether it would make sense to sell these and top up some of my other blue chip dividend holdings which are down (e.g. BIP, Telus, Royal Bank, BNS, TD, FTS) and hold a better upside over the next couple of years? Appreciate your advice as always …now more than ever.