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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: Retired dividend-income investor. I currently own ZLB (in RRSP, max'd out, love it) ZRE (Cash account, purchase for LT hold-distributions, plan to add to it over time) and ZWC (Cash account, purchased for LT hold-dividends).

I have a sizeable capital loss in ZWC....2 choices. #1 = Keep it, top it up over the next several months. #2 = Sell it, save the capital losses for future years (don't need them for 2020) and replace with either CDZ or XDV. I flushed XDV right away due to the very skewed asset allocation (to financials & utilities).

So that left the comparison between ZWC and CDZ. Their metrics are, for the most part, similar (beta, P/E, P/CF, ROE, MER).

ZWC is down 39% YTD, pays a current yield of 11%, has a reasonable asset allocation (the 22% energy allocation initially may seem high but might be good for the eventual rebound). However, I don't have the knowledge on how the Covered Call part of ZWC may impact the comparison with CDZ.

CDZ is down 43% YTD, pays a current yield of 6%, but has a slightly more diverse asset allocation and has performed better than ZWC over a 3 year period, but has a higher Beta.

I entered the comparison exercise believing I would conclude to sell ZWC. Now however I might just periodically top it up. Your thoughts please?

Thanks....Steve
Read Answer Asked by Stephen on March 24, 2020
Q: I have approached my stop losses in these investments, should I sell to try to preserve capital to re-enter the market later after a bottom is more likely?? Say when the VIX is below 40? I kronor you can't give personal advice, just wondering what you would do, I'm 68 and retired, thank you.
Read Answer Asked by Pat on March 24, 2020
Q: Thanks for your great insight as we move through these uncertain times. U.S. Banks will be under pressure with the current virus and oil crisis taking it's toll. Some (or all) may need a bailout. What is your opinion on the risk going forward for U. S. banks, and are there U.S. Bank ETF's that trade in Cdn. $$'s on the TSX, that you feel are reasonably stable longer term, and offer the best way to play this sector at some point going forward. Thanks. Warren
Read Answer Asked by Will on March 24, 2020
Q: Hello,
I’d like your opinion on phys.ca. I’m holding a small amount that I bought at $13 and the price is down a little. Is now a good time to average in or do you think it’s still too early?. What are your thoughts on Projections of $1800 plus per oz? This will still be a relatively small holding in a trading account.

As always thank you for your insight.
Dave
Read Answer Asked by David on March 23, 2020
Q: Realizing that you don't have a crystal ball can you suggest how safe you think the dividends are for DIV, FRU and A&W?
I am seeking dividends in a registered account and if the dividends from the above companies are threatened or cut I guess the stock price would would really collapse. I am thinking I could sell and replace them with a much safer dividend ETF like FDV (or anthing you suggest). On the other hand, if you think they might be
Ok, they sure are paying one heck of a dividend right now and if the stock price could recover in due course I would just be as well off continuing to hold.
Read Answer Asked by David on March 23, 2020
Q: Thanks for all your hard work during this uncertain period.

I'm transferring conservative Mutual fund monies (to get out from under their fees) over to Questrade.

I want to keep that money conservative. I'm not drawing back, but just trying to keep my allocation.

I've read that similar bond ETFs are not the best way to go forward. Some recommend cash, even US cash but this seems too fearful.

Please recommend an ETF option for this situation.


Read Answer Asked by Kevin on March 23, 2020
Q: Hi Peter & 5i,
Thank you for all your professional advice with your years of experience and calmness during this market turmoil.
My question is about bonds.
I have a portion of my fixed income in CBO.
Currently a retail investor can pick up some fixed income bond/debenture from the above mentioned banks with longer term maturities (say 2028 to 2030, they are callable between 2024 and 2026) with a 4% interest rate at current valuations (which are below $100). Even if they did get called then you would get the capital gain and the better interest rate for 4 to 6 years.
Do you think it would make sense to sell a bit of CBO and buy a few of these bank instruments in the current environment?
Your opinion is much appreciated. Thank you.
Read Answer Asked by Dennis on March 23, 2020
Q: XBB, HFR and FLOT have not held up well during this challenge. Can you suggest some liquid bond ETF's that will simply stay flat and pay a modest dividend?
Read Answer Asked by Gregory on March 23, 2020
Q: Considering buying US large caps ETF when things turn more positive.
To hedge or not to hedge with the Cdn$ having fallen so much largely but not only because of the Russia/Saudi war on the price of oil - which will get resoved. I understand under normal circumstances your preference for not hedging.
Thanks for your great service especially during these uncomfortable times.
Read Answer Asked by bill on March 23, 2020
Q: I'm looking for tax-loss harvesting guidance with some ETFs. Can you provide alternatives to hold for XEF, XEC, and VUN that would likely be accepted by the CRA as non-wash? Thank you!
Read Answer Asked by Andrew on March 23, 2020
Q: Your suggestion to not have covered calls make sense, however can you suggest ETF's to replace the 3 I have?
Also you say this is a good time to buy dividend stocks, can you please suggest some good ones.
Read Answer Asked by Bonnie on March 23, 2020
Q: Retired, dividend-income investor. I own ZWC and ZRE and am thinking of topping them up. Their share prices have obviously taken a hit and buying more at these lower prices with magnified dividend yields "appears" attractive.

What I am wondering is related to the continuation of the dividend. By my numbers, ZRE is yielding 7.4% and ZWC 10.5% (annual dividend divided by current stock price). Am I correct that the yields are supported by not only the underlying security, but the covered call option? What happens if the underlying security reduces their dividend? I guess my real question is...is there a risk of the ETF dividend being cut?

Thanks...Steve
Read Answer Asked by Stephen on March 23, 2020
Q: I understand that a covered call investment is not the holding to have during a market rebound.

Instead of ZWE, which ETF would be appropriate holding to capitalize on a rebound.
Read Answer Asked by Peter on March 23, 2020
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