Q: Can I have your thoughts in putting some TFSA money into MKP, for a couple years, thinking it might be a place to invest while the world figures out where things are going. It pays good dividends, and lower interest rates, with increased construction, should provide some stability. Or, please suggest an alternative idea. Thank you
5i Research Answer:
MKP is a decent company, but there are risks. It is priced well at 7X earnings, but it is small, and entirely sensitive to rates and the housing market. It has managed cycles quite well, but since so much is paid out very little cash is left over for growth. We would prefer a similar, but larger company such as FN. Yield is lower, but it is about 4X as large and this adds a bit more safety.