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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: Hi,
I have a sizeable (for me) amount of cash that I would like to make some safe earnings on for the next 5 weeks until it is invested in a commercial property. Obviously short term and the investment needs to reflect that. What are the best/highest yielding cash like products around right now? Ideally exchange traded, I don't want to bother moving cash out of my bank (RBC).
Read Answer Asked by S F on February 26, 2018
Q: Noticing the pull back in interest sensitive stocks recently, such as the utilities and the telecoms, I was wondering whether it would be a good time to bump up my allocation to these sectors? Or, is there more loss yet to come? I know you don't have a crystal ball so I am not expecting absolute predictions. But, you do have insight into market movements and therefore worth consulting. Currently my holdings are
7% in utilities when I think you recommend about 15% for someone at retirement.
and
7.7% where your recommendation is 10%

I hold the usual Canadian suspects plus BAC in the US.

If you think it would be right to fill up, would US or Canada be better? As I say, I most of these sectors are in Canadian.
thanks
Read Answer Asked by joseph on February 26, 2018
Q: Hi Peter,

In light of Enbridges current price of ~ $43.00, I took the opportunity to take a look at historical yields on Enbridge, as I’m currently contemplating buying more. I was able to source data back to 1995, which turned up a few interesting things, specifically:
- The long term growth rate of the ENB dividend has been ~ 11%
- The current yield (6.3%) is one of the highest yields in recent years.
- The yield has traditionally bounced between 2% to 5% since 1995. The period from 2016 onwards (weakness in energy sector) has seen the yield “fatten up” significantly.

With this information in mind, it’s my opinion (which could be wrong!) that for a longer term investor who is patient, Enbridge is simply a waiting game. The current public sentiment towards energy infrastructure (pipelines) pretty much guarantees that nothing new can be built, but also guarantees that what is in the ground will remain full, as I can’t see consumption of hydrocarbons/energy falling off a cliff anytime soon. Over a 5 year period, even if one ratchets down ENB dividend growth to 5% annually, and one assumes that the future yield comes in at the high end of 6%, this suggests that the future share price of ENB would be somewhere in the neighborhood of $57.00 ($3.42 dividend/ 6%). While this doesn’t suggest a massive gain, it still entails a compounded annual ROR of 5.8% over this period, and this assumes a “low end” scenario. On the other hand, if ENB can maintain dividend growth of 8% (which is still less than their guidance of 10%) and the yield corrects to something closer to a historical average (4%) then this would suggest a future price in five years of $98.40 ($3.93 dividend / 4%), a compounded annual ROR of 18% over a five year period. The risk in all of this is that something catastrophic happens, and ENB chops their dividend, much like TRP did back in ’99 (or 2000?).
My request is therefore simple – let me know what the flaws in this thesis are, or if you believe it to be sound, let me know that it is. Thanks.
Read Answer Asked by Mike on February 26, 2018
Q: EFN came out with an outlook that was a bit gloomy, expecting earnings to be down a few percent, yet the stock and the rate reset bond dropped by about a third. They say that a "turnaround" in earnings is not due until 2020. The yield on the bond is now well over 8.5%. Can you give me your opinion of this rate reset bond? and of the company's prospects? Is the dividend safe?
Read Answer Asked by arnold on February 26, 2018
Q: A lot the utilites have been beaten up, I have a bout half the utilities that you recommend fdor someone my age, I was wondering if this was a good tijme to fill up my coffers and buy, enpty my coffers would I suppose be more logical) so i was wondering if you think this is a good project at this point, If so, which one? Would you also take a chance on BCE
Read Answer Asked by joseph on February 26, 2018
Q: Hello 5i team,
Craig Machel of Richardson GMP was citing on BNN that CPP had migrated since around 2000 from the 60/40 asset allocation to 35% equity and the rest in hard assets and private loans; in other words, private yielding and defensive strategies and equity growth that is not from indices. He also mentioned that retail investors could have access to such vehicles but, understandingly withheld any specifics.
Could you shed some light on the subject? It would be much appreciated.
Antoine
Read Answer Asked by Antoine on February 23, 2018
Q: Hello,

If there is never another new pipeline built in Canada (which I feel is a real possibility), how would you view pipelines companies as long term investments going forward?

Regards,

Robert
Read Answer Asked by Robert on February 23, 2018
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