Q: Hi 5i,
I have about 15K that I want to put into my RSP before the February deadline and then immediately invest for a minimum 5 year hold to accumulate capital gain and dividend income. Currently I'm considering TOU or DIR.UN for this, and would appreciate your thoughts about the relative merits of each for this use of the funds, and which one you think will outperform the other on a total gain basis in that time period - based on just the standard ups, downs and risks that are out there and not taking into account any potential calamitous economic events.
Thanks!
Peter
I have about 15K that I want to put into my RSP before the February deadline and then immediately invest for a minimum 5 year hold to accumulate capital gain and dividend income. Currently I'm considering TOU or DIR.UN for this, and would appreciate your thoughts about the relative merits of each for this use of the funds, and which one you think will outperform the other on a total gain basis in that time period - based on just the standard ups, downs and risks that are out there and not taking into account any potential calamitous economic events.
Thanks!
Peter
5i Research Answer:
DIR.UN is structured as a REIT, and as such pays out the majority of its cash flow. Yield is 5.13%. We might expect some growth, but would consider it an income stock first. TOU is a combination. It has promised four special dividends this year, and has a solid balance sheet. We would consider it the best natural gas company in Canada, but it is in a highly cyclical industry. But it has created a lot of shareholder value in its time. With its special dividends, yield should be equal of higher than DIR, but potential upside should be much more, under the right conditions. We would side with TOU here.