Investment Q&A

Q: Hi Team: a general question on rising rates and the "positive impact" on lifecos. How is it that with all of their bond holdings, they can benefit as rates rise? Everyone else gets hit; but they don't? thanks

Q: Hi guys I would like your opinion on which utility stock, I have aqn,fts and npi, I should reduce in order to buy pwf or could you suggest a similar type of company with a prospected of capital gains when interest rates raise.

Q: Hello 5i Research,
When holding US dividend paying stocks there is a 15% with holding tax applied to any dividends held outside an RSP.

If the after tax dividend rate on the US dividend is equal to a Canadian dividend, is there any tax advantage, as the with holding tax has already been paid on the US dividend.
Thanks.

Q: A recent article suggested that stocks newly added to the TSX composite index may see a price bump due to buying by index funds. Have you seen evidence to support this thesis for past additions? The three securities added this time are: Norbord (NBD); Dundee Int'l REIT (DI.UN); Ritchie Bros. Auctioneers (RBA). You've expressed generally positive opinions about these three in the past. What are your views now, either in the context of their being added to the index or simply on their own merits. Thank-you.

Q: TD Waterhouse lists the "Book Value" of Cline Mining (CMK) at $1.14. The company, without shareholder approval, is de-listing the stock on June 21st, 2013 because it cannot meet interest payments on debt. Would you please help us all understand what happened here (I understand there are no coal sales, but Cline's assets appear greater than their liabilities)? Marret Asset Management Inc., who represent the bond holders, has been able to take over the Board in several months, and the Board "voluntarily" has (without shareholder approval) approved a de-listing of the stock. Is the Board not obliged to sell assets to keep shareholders whole before de-listing, destroying all shareholder value? Your insight would be greatly appreciated, and an in depth article on the inner workings of these transactions would be a Godsend.

Q: When looking at buying an individual stock, how much weight should be given to the P/E ratio? I read suggestions to look for stocks in the 10-15 range (like the Canadian banks), yet I also see Strong Buy recommendations for stocks with ratios well above this range e.g., Enbridge. I realize P/E is 'just one metric', but I'd to understand it's level of importance when evaluating a stock for possible purchase. Thanks in advance for your response.

Q: I wonder if you can comment on nickel and copper prices going forward as they apply to Sherritt and First Quantum. The nickel story seems to be a glut from big mine start-ups whereas the copper story seems to be mostly China. How will metal prices affect these companies in the near to mid -term (6-18 months)?

Q: Where would an ordinary investor find information on a company's open-market repurchase of its own shares? Do I understand that there are rules limiting (e.g. daily limits) how many a company can repurchase this way? What about open-market purchases by insiders / senior management?

Thanks for helping educate new investors!

Q: Hello 5i Team. After 3 years as a DIY investor who's sought out numerous sources for information and advice, I have to say that the couple of months I've been a 5i subscriber has so far provided the best service and value. The individual company reports are concise and clear, and the Q& A is invaluable.

My wife and I are retired with some pension and a fair number of laddered GICs, but need additional dividend income to round out our retirement needs. We presently have a portfolio of about 18 stocks, mostly dividend payers and reasonably diversified (e.g. AFN, EIF, WFT, BTE, PPL, PZA). However, we've been sitting on a fair bit of cash, patiently waiting for a suitable pullback and entry point on some expensive 'blue chip' dividend stocks in the banking, utilities, telecom and pipeline sectors.

While I know that no one can time the market, what information should a retail investor look for before buying into these sectors ... especially given the current sector rotation?

Thanks
Tom

Q: Hi Peter,
Please explain briefly how the market works "after hours". The exchanges in North America close at 4 eastern time yet sometimes I hear of further trades. How is this possible?
Thank you

Q: Re: dividend paying stocks and interest rates: thanks to 5i and Lance for the insight. This was a point I totally overlooked and is obviously an important one.
The Q&A is an excellent way to learn and I very much appreciate it!
Cheers,
Mike

Q: Peter, I have owned the ETF XRE (RRSP) for over 4 years and incl. reinvested dividends I have a gain of approx. 130%. REITS have been hit recently due to concerns about our real estate market (negative press as always) and > interest rates, I guess? Would you sell or keep-Reits should do well in a little higher int. rates as this would indicate a bit of inflation which should be good for fixed asset valuations-I would think?

Q: hi team :
Superior Plus Corp SPB:TSX
do you see any company related reason for it being 8-10 % down. would you advise to add to a position or hold ??
Thanks
yossi

Q: Hi, why is it that all the stats for companies differ on each website? I'm looking for chemtrade and Rogers sugar's payout ratio, but the numbers are different from td to globeinvestor to yahoo. I just want to learn how to look through them and what/what not to include / most important in calculating it. Your views / quick examples? Thanks.

Q: I have a question regarding the 5i portfolio model. Is it too late to purchase these stock.? I see some have made substantial gains since March 1st,? Or should I just pick some of them that haven't made as much gains as others. ? Thanks for your reply. Really like your service.

Q: Hi 5i: Just an additional comment on the discussion speculating on the rational connection between dividend yields and interest rates. It is important to remember that stocks don't trade off of their yields alone, even though income investors may be particularly interested in comparing the net benefit of different kinds of income streams. Low interest rates don't only make dividend yields relatively more attractive. They also mean that those dividend paying businesses are themselves operating in a low-cost debt and capital environment. That is the ideal business environment for many dividend paying companies. So when interest rates rise, it doesn't only mean that debt compares more favorably as an investment. It can also mean that those dividend paying companies are going to have to generate their cashflow and maintain growth expectations in a relatively more difficult economic environment. This impacts people's perceptions of the potential future value of the companies.

Q: Hello,

What are your thoughts on using the PEG ratio as an added metric to analyze growth companies? I'm looking at Kulicke & Soffa Industries (KLIC), the fundamentals that are available to me look decent, low P/E, no debt, high growth. This stock has a PEG of .44, would you take that ratio into consideration when deciding whether to invest or would your decision be based only on the fundamentals.

Thank you.

Q: Of the good dividend growers, which companies would you recommend of the companies that you follow.thanks

Q: Hi Peter,
In a recent answer you mentioned in your opinion 'Some cyclicals are recommended --materials and manufacturing.' Metals and mining have really been hammered- would you recommend starting to pick them up now?
Thanks

Q: I'm planning to sell a few Canadian stocks and am interested in more investments in the US, specifically CVX, COP, MRK, JNJ, and WFC. Can you tell me which, if any, of these stocks have dividend reinvestment plans? Or, how can I find this info myself?