Weekend Review: GIC's, Bonds vs. Preferred Shares

As promised, please review data comparing GIC’s, Government and Corporate Bonds and Preferred Shares:

2014 Maturity: GIC’s: London Life (3.5%), Manulife Bank (3.4%), Canada Western Bank-Canada Life-Standard Life-Desjardins (3.25%).

Gov’t Bonds: Ontario (2.82%), Quebec (3.11%), Canada (2.64%).

Strip Bonds: Nova Scotia (3.36%), Ontario (3.28%), Manitoba (3.43%).

Corp. Bonds: Bank of Montreal (3.28%), Cogeco (4.75%**), Bank of Nova Scotia (3.15%).

2015 Maturity: Gov’t Bonds: Ont (3.18%), Fin. Qbc (3.5%), Can (2.74%).

Strip Bonds: Nfld. & Lab. Hydro (3.6%), BC (3.51%), Ont (3.52%), Can (2.74%).

Corp. Bonds: GE Cap. (4.41%), CNQ (4.25%**), BMO (3.35%), Manulife (4.05%), Westcoast Egy. (4.36%*).

2016 Maturity: Gov’t Bonds: Ont (3.47%), Can (2.93%), Qbc (3.68%).

Strip Bonds: BC (3.91%), Can (3.2%), Qbc (3.94%), Ont (3.90%).

Corporate Bonds: Shaw Comm. (4.53%**), Enbridge (4.14%), Rogers (4.39%**), Loblaws (5.04%**).

2017 Maturity: Gov’t Bonds: Ont (3.72%), Can (3.12%), Qbc (3.91%).

Strip Bonds: Can (3.41%), Ont (4.08%), Hydro Qbc (4.27%), BC (4.4%).

Corp. Bonds: Gtr. Tor. Airport (4.45%), BMO (3.88%), GE Cap. (5.28%).

2018 Maturity: Gov’t Bonds: Ont (3.92%), NB (4.0%), Can (3.28%), Qbc (4.11%).

Strip Bonds: Canada (3.61%), NS (4.68%), Qbc (4.46%), Ont (4.31%).

Corp. Bonds: Alberta Energy (4.53%*), BMO (4.19%), Finning (5.34%*).

-note- Italicized yields are for lower quality bonds, the more asterisks, the lower the overall grade.

Preferred Shares: Manulife.D - rate reset 06/2014 (5.89%), Sunlife.A - perpetual (6.08%), Power Financial. K- rate reset 10/2011 (6.07%),

CIBC.M – rate reset 07/2014 (5.87%), BMO.O – rate reset 05/2014 (5.77%), RY.X – rate reset 08/2014 (5.64%).

In case of bankruptcy, preferred shares have a lesser guarantee than bonds. However, reviewing the statistics above, it appears that they offer a much better return.

Review of Thursday AM, July 30 Blog: Following the strong recommendations by Jim Cramer of CNBC’s Mad Money on Wednesday evening, both Potash and Agnico Eagle gained substantially the next day on large US volume. The “moral” of the story for me would be that whenever Jim Cramer highly touts a Canadian company where the stock is co-listed in the US, it would make sense to take advantage of that “opportunity”. He obviously commands a great deal of influence.

Review of Thursday AM stock picks (price before market opening versus Friday close): NXY ($21.57-$22.33), TLM ($16.27-$16.65), CNQ ($61.75-$64.76), ECA ($55.76-$57.78), SU ($33.32-$35.47), POT ($100.37-$100.36), AGU ($48.22-$49.51), CNR ($50.11-$52.39), RIM ($82.37-$81.82), BMO.PR.L ($24.95-$25.05), RY.PR.D ($19.68-$19.93), RY.PR.X ($27.68-$27.69), SLF.PR.A ($19.00-$19.54), SLF.PR.B ($19.20-$19.68).

I’ll stick to the same picks for now but will add that you watch for and accumulate Manulife (MFC) & Sunlife (SLF) on any weakness. Continue with summer caution and good luck. Warren.