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Preferred shares
March 10, 2020
1:22 pm
Doug
British Columbia, Canada
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Bud said
PPL.PR.K $ 23.76 
CHANGE
-1.49 (-5.901%)
VOLUME
9,350

PPL.PR.M $ 23.46 
CHANGE
-1.84 (-7.2727%)
VOLUME
11,300  

Bud, you should just buy PPL if you like Pembina Pipeline. It's gapped down significantly from recent highs, into the low thirties. If you have at least a 5 year time horizon, you'll most likely do much better than buying the preferreds, hoping they get called away.

Also, I noted Intact Financial Corp. just closed a perpetual preferred share issuance...haven't seen a perpetual preferred issuance in quite some time! This suggests to me that the issuers are seeing low rates for a long time, as that's when it's beneficial to go with a perpetual issuance since it pays the same dividend rate regardless if rates go up or down. If rates rise, the perpetual preferred's share price will see some decline on the secondary market, but it could make sense if you need a consistent 5.5-5.75% coupon and have no rush to sell.

Cheers,
Doug

March 14, 2020
7:39 pm
Bud
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Minimum Rate Reset Preferred Shares List

https://canadianpreferredshares.ca/list-of-minimum-rate-reset-preferred-shares/

Brookfield "the great" has a large presence on the list why

Still not confident enough to buy pfds. Cdn Utilities TC Enbridge on list

March 14, 2020
9:16 pm
Joe
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Bud said
Minimum Rate Reset Preferred Shares List

https://canadianpreferredshares.ca/list-of-minimum-rate-reset-preferred-shares/

Brookfield "the great" has a large presence on the list why

Still not confident enough to buy pfds. Cdn Utilities TC Enbridge on list  

Thanks for that link Bud....

Tangerine....Canada's best bank. LBC.............Canada's 2nd best bank.
Hubert.....worst bank in Canada.

March 15, 2020
6:08 pm
Bud
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https://canadianpreferredshares.ca/list-of-minimum-rate-reset-preferred-shares/

To explain "Fixed rate base" in table take Enb.pfi.i pfd for example, 5YR MIN 5.15% + 4.14%

4.14% means if the 5 year bond rate is 1% 5 years from the issue date, the renewal dividend rate would be 5.14% with a minimum floor of 5.15% if the company does not redeem the shares.

It was suggested buyin a utility common stock like Fortis (not yet i think) if pfds confusing.

August 7, 2020
8:44 pm
Bud
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How r Pfds holdin up

Status of these ones:
TRP.PR.K
ENB.PF.I
RY.PR.W 

August 9, 2020
7:07 am
canadian.100
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Bud said
How r Pfds holdin up

Status of these ones:
TRP.PR.K
ENB.PF.I
RY.PR.W   

Very well, actually.
Pref shares in general but Perpetual Preferreds in particular have really done well - of course due to the recent big drop in interest rates. The 5%, 6%, etc. dividends paid by Preferreds are attractive compared to 1% GICs. And these are for Preferreds issued by Banks, Insurance companies, Pipelines, Utilities.

August 10, 2020
7:34 am
savemoresaveoften
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I "prefer" guarantee min rate prefs over the perpetual.
Maybe I am old enuf to remember rates were quite a bit higher than they are now.

My strategy on prefs are just spray it across different names to diversify your name and reset risk. Keep in mind prefs are illiquid and are more sensitive to rate change than corporate bonds. So treat it as dead money which generates live interest 🙂

August 10, 2020
8:07 am
pwm
Headingley MB
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I have ~12% of my investments in perpetual prefs. I like to buy them when prices are down, like earlier this year when I got 1000 shares of POW.PR.D at $19.50. (Wish I had waited a while !). It's close to 22.50 today, so almost a $3.00 per share cap gain on those shares, and it's yielding over 6% at my average cost. Can't go wrong with perpetual prefs as a great source of dividend income in a taxable account. Especially for a retired person such as me.

August 10, 2020
12:50 pm
canadian.100
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savemoresaveoften said

My strategy on prefs are just spray it across different names to diversify your name and reset risk. Keep in mind prefs are illiquid and are more sensitive to rate change than corporate bonds. So treat it as dead money which generates live interest 🙂  

I would say the Credit Union type Pref shares like the PACE shares (discussed in another thread) are illiquid and were illiquid from the start. I would not say Pref shares trading on the TSX (issued by major Banks, Utilities etc) are "illiquid" - I do agree though that volumes are not always large but they are saleable, if one wants to dispose of them. If you hold on to them, they generate "live dividends" which is even better than "live interest" due to the dividend tax credit.

August 11, 2020
7:35 am
asiamalekas
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You can get a list of the non-NVCC for all the canadian banks. Just find the website which lists all of them. Search for "compare preferred shares of canadian banks" on google or bing. Since this is my 1st post here if i put the link my account will be canceled.

August 11, 2020
1:26 pm
implode
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I hate my preferred shares...they all tanked and I don't see the issuers redeeming them back. And I don't want to sell them with this loss

August 11, 2020
1:57 pm
seh
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pwm said
Can't go wrong with perpetual prefs as a great source of dividend income in a taxable account. Especially for a retired person such as me.  

I used to think the same thing about my Nortel preferred.

August 11, 2020
4:58 pm
asiamalekas
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I buy the preferreds for steady income. Todays average yield is 6.05%.

Last Updated: Market Data Aug-11 18:02, Model Metrics Aug-11 18:12
Number of Shares Tracked 358
Number of Companies Tracked 54
Todays Average Market Yield 6.05%
Preferreds Market Cap at Market Value 62,061,216,163 Market Cap at Face Value 82,512,828,200 Dicsount Amount 20,451,612,037 Discount Percent 24.79%

Where else can you get such good yields. Not to mention the Dividend tax credit on top of that.

August 11, 2020
6:31 pm
Bud
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implode said
I hate my preferred shares...they all tanked and I don't see the issuers redeeming them back. And I don't want to sell them with this loss  

Which

August 12, 2020
5:02 am
pwm
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asiamalekas said
I buy the preferreds for steady income. Todays average yield is 6.05%.
  

Right you are. Thanks for that post.
GOC 10 year bond: 0.48% interest income.
Average pref yield: 6.05% dividend income.

What more is there to say.

August 12, 2020
6:12 am
canadian.100
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seh said

I used to think the same thing about my Nortel preferred.  

I would consider the FAANG stocks similar to Nortel - definitely not for "conservative" investors. I remember Nortel and the tech bubble - the P/E for Nortel was way too high and not for risk-adverse investors. It was the sister firm BCE (both Preferred and Common) that was considered safe at that time; BCE (Preferred and Common) are still very conservative investments.

August 12, 2020
8:40 am
Bud
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canadian.100 said

I BCE (Preferred and Common) are still very conservative investments.  

You think with over 25bill in debt.

August 12, 2020
9:09 am
canadian.100
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Bud said
You think with over 25bill in debt.  

Why don't you also give us the Total Assets, Earned Surplus and Annual Profit?
$25 billion in Debt on its own is not telling the whole story, which seems to be your style.

If I owned a house worth $1M and I have a mortgage of $500K, I guess you would consider me bankrupt.

August 12, 2020
9:30 am
Bud
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August 13, 2020
6:16 am
savemoresaveoften
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Bud said
You think with over 25bill in debt.  

That logic is a little too simplified to judge the financial health of a company.

If one just look at the debt alone, one will never invest in any utilities companies, and heavily invested in high tech startup which has no debt (cuz they are funded with venture capital, and no ability to borrow via standard debt instrument).
That to me is a way more risky portfolio.

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