How to Buy Preferred Shares in Canada: A Step-by-Step Guide (2026)

Before You Buy Canadian Preferred Shares

Preferred shares occupy a unique space between bonds and common stocks — offering regular dividend income, preference over common shareholders in the event of liquidation, and in many cases, dividend tax credits that boost after-tax yields. For Canadian income investors, they can generate yields of 5% to 7% or more, often with lower volatility than common equities.

But buying preferred shares for the first time can feel intimidating. The terminology is different, the ticker symbols look unfamiliar, and the types of preferreds — rate resets, perpetuals, floaters — each behave differently depending on interest rates. This guide walks through the entire process step by step, from opening a brokerage account to placing your first trade and tracking your dividends. Updated October 2026 with an ETF comparison section and a buying FAQ.

Step 1: Open a Self-Directed Brokerage Account

Preferred shares trade on the Toronto Stock Exchange (TSX), so you need a Canadian brokerage account that provides access to TSX-listed securities. All major self-directed brokerages in Canada support preferred share trading:

Most accounts can be opened online in 15–20 minutes. You will need your Social Insurance Number, a government-issued ID, and banking details for funding. Once your account is funded, you are ready to trade.

Step 2: Understand the Types of Canadian Preferred Shares

Before buying, you need to know what type of preferred share you are purchasing. Each type reacts differently to interest rate changes, and the type held determines how the position behaves when rates move.

Rate resets are the most common type in the Canadian market today, making up the majority of the 250+ preferred shares currently trading. They offer built-in protection against rising rates because the dividend resets every five years to the prevailing Government of Canada 5-year bond yield plus a fixed spread. If rates have risen, your income resets higher. You also typically have the option to convert to a floating-rate share at each reset date.

Step 3: Research and Screen Preferred Shares

Once you understand the types, the next step is identifying specific shares to buy. This is where most investors get stuck — there are over 250 preferred shares on the TSX, and comparing specific issues requires evaluating several factors:

• Credit rating: Look for investment-grade ratings (P-1 through P-3 from DBRS, or equivalent from S&P and Moody's). Higher ratings mean lower default risk.


• Current yield: Compare the dividend yield against similar shares. Use our preferred share rankings page to sort by yield, type, and issuer.


• Reset spread: For rate resets, the spread over the GoC 5-year bond that will apply at the next reset. A higher spread means more income at reset.


• Days to reset: How soon the next reset occurs. Shares resetting soon may see price movement as the market prices in the new dividend rate. The full schedule of upcoming reset dates is on our rate reset calendar.


• Liquidity: Check daily trading volume. Low-volume preferreds can have wide bid-ask spreads, making them harder to buy and sell at fair prices.


• Issuer quality: Major Canadian banks, insurance companies, and utilities tend to be the most stable issuers. Smaller or highly leveraged companies carry more risk.

Our preferred shares data table lets you filter all 250+ Canadian preferreds by type, yield, credit rating, and issuer — so you can build a shortlist before placing a trade. You can also explore split share corporations if you are interested in the split share structure.

Individual Shares or a Preferred Share ETF?

The same TSX preferred share universe is also available through a single ticker: preferred share ETFs such as CPD, ZPR and HPR bundle dozens of issues with monthly distributions at an MER of roughly 0.49%–0.65%. Individual shares carry no management fee but require per-issue research — the structural trade-offs in cost, control, tax treatment in taxable accounts, and single-issue concentration are compared in detail in our guide: Canadian Preferred Share ETF vs Individual Shares. Each fund’s current top holdings with weights are on our ETF pages for CPD, ZPR and HPR.

Step 4: Place Your Trade

Once you have identified a preferred share to buy, placing the trade works the same as buying any stock on the TSX. Here is what to expect:

1. Find the ticker symbol. Preferred share symbols on the TSX follow a specific format: the company abbreviation, followed by .PR., then a letter for the series. For example, BNS.PR.E is Bank of Nova Scotia Series E preferred share. Your brokerage's search bar will find these when you type the full symbol.


2. Review the quote. Look at the current price, bid, ask, and volume. Preferred shares typically trade around their $25 par value, though prices fluctuate based on interest rates and issuer-specific factors. The bid-ask spread can be wider than common stocks, so check it carefully.


3. Choose your order type. For most preferred share purchases, a limit order is strongly recommended over a market order. Because bid-ask spreads can be $0.05–$0.15 or more, a market order could fill at a price significantly above the bid. Set your limit price at or near the current ask for immediate execution, or slightly lower if you are willing to wait.


4. Enter the quantity. Preferred shares trade in board lots of 100 shares. At $25 per share, one board lot costs approximately $2,500. Some brokerages allow odd-lot purchases (fewer than 100 shares), but liquidity may be lower.


5. Review and submit. Double-check the symbol, price, and quantity before confirming. Your brokerage will show the estimated total cost including any commission.

Step 5: Understand Dividend Payments and Tax Treatment

After purchasing, you will begin receiving quarterly or monthly dividends depending on the share. Here is how Canadian preferred share dividends work:

• Payment schedule: Most preferreds pay quarterly, though some pay monthly. The ex-dividend date, record date, and payment date are set by the issuer and announced in advance.


• Dividend amount: The rate is fixed at issue (for perpetuals) or resets periodically (for rate resets and floaters). For a $25 par share paying 5%, the annual dividend is $1.25 — typically split into four quarterly payments of $0.3125 each.


• Eligibility for dividend tax credit: Dividends from Canadian corporations qualify as eligible dividends, meaning they receive enhanced tax treatment through the federal dividend tax credit. In a non-registered account, this can reduce the effective tax rate by roughly 25–35% compared to interest income at the same marginal rate.


• Tax-free in a TFSA or RRSP: If you hold preferred shares in a TFSA, all dividend income is completely tax-free. In an RRSP, dividends grow tax-deferred until withdrawal.

Risks Every Preferred Share Buyer Should Know

Preferred shares are generally safer than common stocks but are not risk-free. Understanding these risks before you buy will help you make better decisions:

• Interest rate risk: Perpetual preferreds lose value when interest rates rise, since their fixed dividend becomes less attractive relative to new issues. Rate resets mitigate this risk but are not immune — they can still trade below par if the market expects rates to stay elevated.


• Extension risk: Some preferreds allow the issuer to extend the reset date or defer dividends. Read the prospectus carefully, especially for non-bank issuers.


• Call risk: Most preferreds are redeemable at par ($25) by the issuer. If you buy above par (e.g., at $26), you could lose $1 per share if the issuer calls the shares back at $25.


• Liquidity risk: Some preferred shares trade infrequently, making it harder to sell at a fair price — especially smaller issues or those from lesser-known issuers.


• Credit risk: While rare for investment-grade issuers, preferred share dividends can be suspended if the issuer faces financial distress. Preferred dividends must be paid before common dividends, but they are not guaranteed.


• Rate reset uncertainty: For rate resets, the dividend at the next reset depends on the GoC 5-year bond yield at that time. If rates have fallen, your income could reset lower.

How Preferred Share Portfolios Are Commonly Structured

• Issuer diversification: Portfolio commentary commonly emphasizes spreading an allocation across 5–10 issuers in different sectors (banks, insurance, utilities, pipelines) rather than concentrating it in one company's preferreds — even a major bank's.


• Type mix: A blend of rate resets (rate-rise protection) and perpetuals (stability when rates are flat or falling) is a structure that appears often in portfolio commentary as a way to diversify the income stream.


• Rating screens: Income-focused screens commonly confine themselves to shares rated P-2 or higher from DBRS; issues rated below that typically indicate a higher yield offered in exchange for added credit risk.


• Price-to-par dynamics: Preferreds trading below the $25 par deliver a higher current yield for the same dividend and reduce call risk — the price-to-par relationship is one buyers commonly watch on the rankings page.


• Reset-date tracking: Track when rate resets come due — near a reset date, prices can be volatile as the market prices in the new dividend. Our reset calendar lists the schedule, and the fixed-vs-floating election at each reset can be decided in advance.


• Reinvest dividends: Many brokerages offer DRIP (Dividend Reinvestment Plan) for preferred shares, automatically reinvesting dividends into additional shares — often at a discount to market price.

Track Your Preferred Shares in One Place

Once you own preferred shares, monitoring your portfolio is essential. Our database covers 250+ Canadian preferred shares with trailing prices, current yields, credit ratings, reset dates, and projected reset yields — refreshed daily from our data pipeline. Use these free tools to stay on top of your income portfolio:

• Preferred Shares Table — Filter, sort, and screen the database's 250+ preferreds by yield, type, rating, and issuer


• Yield Rankings — See which preferred shares offer the highest yields right now


• Issuer Pages — Deep-dive into specific companies and all their preferred share issues


• Split Share Corporations — Compare split corps and their preferred share classes


• Market Analysis Blog — Regular updates on preferred share market trends and rate decisions

Buying Preferred Shares in Canada: Frequently Asked Questions

Can I hold preferred shares in a TFSA or RRSP?

Yes. TSX-listed preferred shares can be held in a TFSA, RRSP, FHSA or non-registered account at any brokerage with TSX access. In a TFSA, dividends accumulate untaxed; in a non-registered account, dividends from Canadian corporations qualify as eligible dividends and receive the dividend tax credit.

How much money do I need to buy a preferred share?

Preferred shares trade in board lots of 100 shares. At the typical $25 par, one board lot costs roughly $2,500 — less for issues trading below par. Several Canadian brokerages charge $0 commission on TSX-listed securities, and some allow odd-lot purchases, though odd lots face lower liquidity and can fill at worse prices.

How are preferred share dividends taxed?

Dividends from Canadian preferred shares are designated eligible dividends: in a non-registered account they are taxed at the preferred dividend rate after the federal and provincial dividend tax credits — effectively a lower rate than interest income at the same marginal bracket. Inside a TFSA they are untaxed, and inside an RRSP they are tax-deferred until withdrawal.

What is the difference between buying individual shares and an ETF?

An ETF such as CPD, ZPR or HPR bundles the universe into one ticker with monthly distributions at an MER of roughly 0.49%–0.65%; individual shares carry no management fee, can be selected issue by issue, and behave differently in taxable accounts. The full comparison — costs, control, tax treatment, holdings overlap — is in our ETF vs individual shares guide.

Can my preferred shares be taken away?

Most Canadian preferred shares are redeemable at the issuer’s option at the $25 par value — a redemption returns par plus accrued dividends, so a position purchased above par realizes a loss on the price difference. Reset dates are separate: at a five-year reset the dividend is repriced to the GoC 5-year yield plus the spread fixed in the prospectus, and the holder can usually elect a floating rate instead. The schedule for upcoming dates is on our reset calendar.

Do preferred shares have maturity dates?

Most Canadian preferred shares have no maturity date. Perpetuals carry their fixed dividend until redemption; rate resets reprice on a five-year cycle; the small retractable minority have a fixed date at which the issuer retracts the shares at par. Dated maturity is a bond feature — preferreds are perpetual instruments with reset and redemption mechanics instead.

Key Takeaways

• Open a self-directed brokerage account with TSX access (Questrade, Wealthsimple, National Bank, or any major bank brokerage)


• Understand the different preferred share types — rate resets, perpetuals, floaters, and split shares each behave differently


• Always use limit orders when buying preferred shares to avoid paying above the ask price


• Compare the single-ticker route: preferred share ETFs bundle the universe for a ~0.5% MER — see the ETF vs individual shares comparison


• Dividend tax treatment differs by account type: TFSA dividends are tax-free; non-registered dividends claim the dividend tax credit


• Concentration risk is a commonly cited factor — the index spans many issuers and preferred types with differing rate sensitivity


• Issuers carry a range of credit ratings, and prices relative to the $25 par value affect call and premium risk


• Use our free tools to research, screen, and track your preferred share portfolio