Investment Q&A

Q: Hi 5i Team,
There were two preferred shares recommended on BNN this afternoon, PWF.PR.S (rated P1) and BRF.PR.E, that I would like a second opinion on.
Both offer healthy yields, and sell at discounts to their call prices. I am thinking of boosting my preferred share content in my dividend-oriented portfolio. Other than interest rate risk, do you see any red flags on either of these issues?
Many thanks,
Brian

Q: How sensitive is BEP.UN to rising interest rates? Can you quantify sensitivity in some way? Is it more or less sensitive than a REIT?
Thanks so much!
Tim

Q: Hi Y'all
Could you please tell me whether EMA is a decent buy at these prices?

Q: I would appreciate your opinion on the BMO Cdn Equity Protected Income Fund "FundSERV JHN993", and the First Asset U.S & Cda Life Income Fund "ULC.UN-T". thank you in advance for your input.

Q: Hi Peter & 5i: Richards Packaging (RPI.UN) has moved higher since your last Report on it and your last Q&A comment as well. It was a C-plus stock for you to start with. Is it getting too expensive to buy now, at 52-wk highs, all things considered, or are underlying fundamentals improving to support the recent move? Thanks.

Q: I own CDZ and some XDV. I notice that ZDV has a higher dividend payment than either of these. How would you rate ZDV compared to them?

Q: I'm looking at EXE convertible debs - are they a reasonable risk or is there just too much debt overall to get involved with Extendicare versus their prospects? Thanks, Mike

Q: Hello team - I am an investor of quality stocks that will (hopefully) grow their dividends annually. I am looking to add a few Canadian names to my taxable account. I currently own banks, TRP, ALA, BCE, PWF, SAP, BAD, and CNR. Which of the following do you see as having the brightest future for consistent dividend increases: CGX, SNC, CTY, KBL, CSU, THI, TRI, or other (??).

Thanks very much.

Q: Thank you for your informative answer on NPI. I, of course, now want to know what you DO think is the best stock in the sector!

Thanks

Q: MSI I have owned Morneau Shappell for awhile and it has been a good income stock and diversifies out of the usual Canadian mix. I am wondering about your thoughts on this going forward.
Thanks

Q: I know you have answered many questions on DCI already. Just wondering since the price drop of Direct Cash do you consider it a buy, sell or hold? I hold 100 shares in my LIRA at a cost of $20.00 per share. Thanks.

Q: My shares in Northland Power are still down 20% despite recent slight movement. Should I just throw in the towel, or hang in there? I hold it for income. Many thanks.

Q: RE: Jeff's question of Sep 22 "They (PPNs) can be replicated....but.....using a combination of an ETF and a bond could still result in a decline of total principal at the wrong time."

It is not my intention to be disagreeable at all and I stand ready to be corrected if I have misconceptions about Hank C's idea but here is a real life example of Hank's Gambit:

On June 21, 2009 I purchased a $24000 Government of Canada Strip Bond maturing December 1, 2015 in my wife's RRSP for $20051 (includes commission estimated at $200) with an annual yield just over 3% which is being held to maturity. About the same time in her cash account I purchased $3600 worth of COW units plus a $10 commission. Although we have since moved around the $878 profit from the sale of COW, I believe her principal of $20050 is still not subject to any kind of decline (present value $23281) so long as the Canadian Govt continues to print banknotes AND I sheltered her interest in a tax sheltered account AND capital gains and dividends in her cash account have been tax preferred AND I knew roughly what fees were paid to set this up AND funds have not been locked in. I believe this approach is superior and safer than any structured product available in Canada including Index Linked GICs and PPNs.

It is my understanding that PPNs are 1) Not covered by CDIC and therefore guaranteed by the institution only, which is an inferior guarantee to Cdn Govt, and 2) any gains made on maturity are fully taxable as interest, so even if you have stock market gains which are capped in the contract, you will pay tax at the highest rate and 3) the capped gains are tied to the performance of the TSX 60 or other benchmark so if you have a loss or are flat all you will see is their very low "guaranteed"rate or worse, just your principal after years of investment and hope and 4) you will never see the true hidden fees disclosed in the contract and 5) funds are probably locked in till maturity or there is a high fee to escape. I have never purchased one of these PPNs though when the Bank puts on an ad campaign for them they look tempting to be sure, so my assumptions could be all hogwash. There is a 10 year old CMS article by Jim Yih which estimates undisclosed fees on PPNs to run from 2% to 12%, seems to me a case of buyer beware!

Please let me know where my ideas might have gone wrong as my wife will surely have my scalp if I lose anything of hers!

Also I have never met Hank Cunningham though I did see him speak once at the Canadian Moneyshow.

Thanks, J.

Q: From the response to Paul's Sep.21 question: "There are some principal-guaranteed products offered by several brokerages also available."

The problem with Principal Protected Notes (PPNs) as so well pointed out by Hank Cunningham in his excellent book "In Your Best Interest" is they are a "product designed solely with fees in mind and not the well-being of the individual investor."

He goes on to illustrate how you can create your own low cost PPN "using a strip or regular bond" plus an "ETF or commodity of your choice."

I hope this helps the discussion of a very problematic area for all on fixed incomes, J.

Q: Hi,

Was looking for your opinion on SFL / Ship Finance International as a long term hold in an offshore account.

thanks,
andrew

Q: Peter and Team,

As a retired Boomer, how does one invest 40-50% of one's portfolio (non-registered) in Fixed Income products in this economic environment with the goal of producing income with no risk of capital loss? Bond ETF's have been dropping like a stone, GIC's pay a pittance, and even Preferred Share ETF's are trading near 52-week lows. I realize the income generated from Fixed Income is usually considered "interest" and therefore fully taxable in a non-registered account, but I want safety for half my holdings over preferential tax treatment. I would appreciate your advice. Thanks!

Q: I am holding xhy which is hedged should I change to the etf in Canadian funds thanks mel

Q: Good morning team, I would be interested to hear your opinion on FAP.

Q: Is Direct Cash (DCI) worth looking at as a buy today given the price drop? Is the dividend sustainable? Or is the analyst's sell recommendation a good reason to hold off? Thanks.

Q: Question regarding FIXED INCOME component of a portfolio, other than the obvious like HISAs and bonds, what else belongs in this category? Prefs,REITs,MICs?

Thanks
Ron