Attractive Yields
CdnPrefs have attractive yields relative to other fixed income instruments
Capital Preservation
Face value is preserved and must be paid when:
Issue is called by the Issuer
Issue is retracted by the holder
Cdnprefs tend to be issued by trustworthy investment grade corporations
Cdnprefs tend to be less volatile and trade around par
Portfolio Diversification Benefits
Preferred shares may improve portfolio diversification due to low observable correlations to traditional asset classes
Tax Advantages
Cdnprefs dividends are taxed more favourably than interest income generated by many fixed income instruments
The after-tax yield is much higher for individuals than similar fixed income securities
