Investment Q&A

Q: Good morning,
Given that CEW includes Banks and Lifecos' and assuming that low interest rates will be with us for some time, I would appreciate your thoughts about selling CEW for tax loss harvesting purposes and purchasing either an exclusively bank ETF such as ZEB or purchasing two banks with the proceeds of the CEW sale. Also, could you also recommend two banks that you would recommend purchasing at some point with the proceeds of the CEW sale. Thank you.
Francesco

Q: I am aiming to have a portfolio with 2 solid companies in each of the 11 sectors. Do you feel SLF and X would be sufficient for allocation to the financial sector? Or would you suggest adding a bank (RY) to provide better diversification? Thanks in advance.

Q: If you were to invest in only 2 Specific Big Canadian Banks at this time, which are the most solvent to weather the storm. Which would you avoid?

Q: I have just read that the European Banks are going to stop paying dividends and that the US banks are under a lot of pressure to follow suit. Do you think that The Canadian Banks will also suspend dividends?

Q: With everyone staying home I would expect the amount of car accident claims to be much lower. Do you think it would make sense to invest in an insurance company like Intact?

Q: In a recent question I asked how to proceed in investing the 30% cash I had during this period of volatility. 5 I recommended a slow procedure... I also mentioned that I had already taken a 4.6 % position in JPM and 5 I commented that a slower approach was recommended. It promptly dropped 10% after the question.... But with the current rally is now up 5% . So the question is do I sell half to get back in line with 5 I's slow approach through the volatility or let it ride ? { there are no tax consequences to selling as it is in a RRIF }

Q: Just a comment about your answer to Stephan's March 26 question regarding Genworth (MIC). You mention that Genworth's payout ratio was over 95% in 2019, but that was just because of all the special dividends they paid out. The company paid 5 (yes, 5) specials totalling almost $9.00/share between Jan 1, 2019 and Feb 29, 2020. The regular dividend is only 54 cents a quarter, or $2.16 annually, compared to 2019 net earnings of $4.92/share, so the regular dividend is very well covered, and I doubt you will be seeing any more specials for a while. Of course, the net income this year will likely be lower.

Q: If DFN moves over $5.00 per share in April will they reinstate the dividend for May ?

Q: Assuming markets will tank again, which would you suggest be purchased for a long-term hold at that time: BAM.A, SLF or TRI? Retired investor looking for dividends with some growth.

Many thanks to the entire 5i team for your collective efforts to provide us with timely, thoughtful information and a much-needed balanced perspective during this most challenging of times.

Q: Hello 5i Team

Could you please provide an update on the mortgage investment corporation.
Are they a reasonable source of higher yield interest income?
The four MIC and First National have suffered the declines similar to the market.
These investments would be held in my RRSP for long term interest income and not for capital gains. These would be a small portion of my high yield fixed income portfolio which includes corporate bonds and convertible debentures.
How did MIC fare in the low interest rate environment after the 2008 crash / recession as most stock charts only go back 10 years.
Thanks for the excellent advice in the last four weeks with all the market changes.

Q: How do you think Thomson Reuters will go moving forward
Thank you
Peter

Q: I have held timbercreek in my rrif for a longtime appreciating it's dividend but little growth. This seems to be a dim outlook for the mortgager in this market as it lost 5% yesterday despite the rally. Is it better that I sell?

Q: Thanks for your work, much appreciated. Regarding dividends from Canadian banks: I have problems figuring they won’t cut. The crisis will take months or most likely 1-2 years (vaccine is the only definitive solution, what we are doing now is only mitigation). The debt load will be very large (mortgage, loans, etc.). Banks will have to keep some money for provision.
Am I missing something ?

Q: DFN, the high-dividend split share fund that people sometimes ask about, has missed its first dividend since its inception in 2004. It even paid the monthly dividend throughout 2008-09. I see the share price is up this morning. I don't think people realize they will not receive the dividend and that it could be many months or even years before the dividend returns.

Q: Thoughts on buying Genworth or Great West at the present time? Looking for a long term Dividend.
Thx

Q: A subscriber named Peter asked for your opinion on GMP.PR.B preferred stock on March 17, but you didn't really answer his question. Instead, you commented on the common stock. Please don't do this again as I am NOT interested in the common stock. I am interested in the preferred stock, which is now down $3 from when Peter asked his question. I know this is a lower-rated pref, but surely the current discount is overdone?

Clearly, in the current virus-riddled economic environment, GMP will have to cut the dividend on its common stock. However, they cut the common dividend to zero a few years ago, but kept paying the preferred dividend. What is your opinion on the coverage for the preferred dividend? Would you recommend that preferred stockholders sit tight, buy more, or sell?

The rate resets on March 31, 2021 at 2.89% above 5 year Canada bonds. Even if the yield on 5 year government bonds goes to zero they'll pay a 2.89% x $25 face value = $0.7225 annual dividend. This seems attractive to me, or am I not properly understanding the yield calculation?

Q: Should I be concerned about this? It is down about half its value. Or should I ride it out?
TORONTO DOMINION BANK 4.75% NON CUM 5YR RT RST PFD SER 20 NVCC

Q: How would you rank these bond funds. I sold FTB and bought PMIF but it is not performing well. Bond funds have not performed well due to the drop in interest rates. I am retired in my late 70’s.

Q: What are your thoughts on this fund now that a lot of the bleak scenarios you referenced in past questions are now upon us? Also, how does Quadravest rate in your opinion of fund managers? Thank-you.

Q: Good morning. Again, thanks for keeping calm and reassuring. My question relates to Canadian banks. I have positions in all five of the big banks and all are down. I’m thinking this might be a good time to sell some bank positions and increase my holdings in others. Does this make sense and how best to execute? Do you have a sense for which banks are likely to recover sooner than the others? Keep that crystal ball polished. A lot of us rely on your guidance. Kindest regards