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Investment Q&A

Not investment advice or solicitation to buy/sell securities. Do your own due diligence and/or consult an advisor.

Q: I am an income investor. I try and purchase equities who raise their dividend by approximately at least the rate of inflation. I hold both BCE and Telus. Given the announcement today by BCE that they will not be raising their dividend in 2025, what are your thoughts on selling Telus and purchasing BCE simply due to the spread in their yields in order to pick up the higher BCE dividend as sort of a proxy to make up for the lack of an expected increase?
Read Answer Asked by Mark on November 04, 2024
Q: Hello,

It seems that BCE is taking a page out of the BNS book by purchasing a US asset and freezing their dividend.

In the case of BNS they enhanced their credibility, in my mind, and I bought more and it is up substantially - thank you.

In the BCE case, this stunt has undermined my faith in their judgement towards dividend holders.

How does any co., let alone a highly indebted co., operating in a very competitive environment sustain a 10% dividend?

They are in the doghouse now - if they bite the bullet and cut the dividend in half they save $2B p.a. to pay towards debt reduction.

I can't see any reason why not at this point.



Read Answer Asked by Delbert on November 04, 2024
Q: By my calculations, OTEX is trading at 8X forward earnings and 10% FCF yield. At current price it has a 3.5% dividend yield. According to TD Cowen's analysis the stock could see a 33% return over the next 12 months if it meets the low end of its forecast. So why are all the buy side analysts downgrading the stock or maintaining their hold rating? Isn’t it time to buy when there's blood on the street and you feel sick in your stomach? Has anything changed in its business fundamentals?
Read Answer Asked by David on November 04, 2024
Q: Question:
When analyzing Total return performance of VDY, RCD, XDIV over the long term. What % is due to price appreciation and what % is due to dividends?
These are ETF's focused on Canadian Dividend Income.

Previous Answer for XIU:

Over the last ten years, XIU’s total return CAGR is around 8.9%, with price appreciation and dividends accounting for 5.8% and 3.1%, respectively.

Over the last five years, XIU’s total return CAGR is around 11.7%, with price appreciation and dividends accounting for 8.3% and 3.4%, respectively.
Read Answer Asked by Ian on November 01, 2024
Q: Good morning. This isn't so much a question as it is to follow up on my question yesterday relating to the tax treatment of 1:1 exchange of share of units of AW.UN to AW.TO for the benefit of other 5i members. My original question, 5i's answer and the answer I received subsequently from AW Investor relations appears below.

Question: My AW.UN shares were exchanged 1:1 for AW Newco. As this was an "exchange" should my broker be showing a capital gain? If there is indeed a capital gain what is the share price that should be used?

5i Answer: The transaction is tax-free, providing unitholders make a Section 85 Election. If new shares were received on a fully 1-for-1 basis (no cash received other than the distribution), the ACB should be the same as it was before. Brokers are inherently bad at these things. One can contact them to change it, but it is better to keep one's own records for CRA purposes.

Following 5i's Answer I reached out to both my broker who referred me to AW Investor Relations.

AW Investor Relations Answer:
"The conversion from units to shares is considered a deemed disposition at a value based on the date of settlement, which varied broker to broker. We have been advised that in the context of the acquisition and disposition of listed securities, the CRA has traditionally taken the position that the acquisition/disposition date for tax purposes is the date of settlement since it is only at that time that taxpayers have the use of the property received (i.e. A&W shares) in consideration for the property they disposed of (i.e., the Fund's units). We are recommending that shareholders with concerns that the delay in settlement caused them to realize a capital gain (on the disposition of their units) that was larger than it would have been had the transaction settled more quickly should consult with their tax advisors as to whether they can reasonably take a different position."

Following AW's response, I sold out of our position in AW "Newco" today for a tax loss at $37.36 to reduce our Capital Gain on AW.UN which had reflected a settlement value of $43.08. We will either reinter in 30 days or move on.

AW's structuring of the sale was, in my opinion, very poorly executed.
Read Answer Asked by Cory on November 01, 2024
Q: Income model portfolio: The list of selected stocks seems quite stable with time, are they considered among the safest choices within TSX , or some other reason ? how to interpret the ratings ? I appreciate the choices but I wish to better understand the guidelines..
Read Answer Asked by Jean-Yves on October 31, 2024
Q: 1) Which has the highest & lowest 10-yr total return potential according to 5i’s research & data?

2) What other defensive names in the US & Canada might provide similar (or better) risk-adjusted returns over 10 years, given current valuations?
Thank you.
Read Answer Asked by Trevor on October 31, 2024