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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: For an investor with a higher risk tolerance who is always fully invested, do you think it is possible to profit on a risk adjusted basis from buying into a market dip on margin (assuming a "reasonable" margin rate of <6%)?

Given your experience, what would be reasonable parameters of a system to do this? I am thinking something along the lines of: If the market (e.g. index tracking ETF(s)) drops 10%, deploy 10% margin, drops another 10% deploy another 10% margin, ... subsequently deleveraging by a similar scheme on the way back up. Are there other schemes in the same vein you are aware of which are profitable?

Would it instead make more sense to wait for the market trend to reverse before deploying margin? For example, say you sit idly while the market drops 30%. Then you wait for the trend to reverse (e.g. Spot price > 200 SMA) and deploy margin, perhaps in 20% increments monthly as the trend continues eventually delevaraging at a new market peak.

Thanks as always.
Read Answer Asked by Andrew on August 11, 2017
Q: I like shareholder friendly companies that routinely increase cash dividends. Here's a list of top names with an average annual growth rate above 10% from 2015-17. Is there any names here you don't like? And are there any names out there you like that aren't on my list?

Cash Dividends
2015 2016 2017 GR (%)
ZCL.TO 0.18 0.82 0.48 63.3
NFI.TO 0.61 0.89 1.30 46.0
GSY.TO 0.40 0.50 0.72 34.2
FSV.TO 0.30 0.44 0.49 27.8
CCL.B 0.30 0.40 0.46 23.8
SIS.TO 0.17 0.22 0.26 23.7
MG.TO 0.77 1.00 1.10 19.5
GIL.TO 0.26 0.31 0.37 19.3
ENGH.TO 0.46 0.54 0.64 18.0
SJ.TO 0.32 0.40 0.44 17.3
XTC.TO 0.24 0.28 0.32 15.5
DHX.B 0.06 0.07 0.08 15.5
ENB.TO 1.86 2.12 2.44 14.5
FSZ.TO 0.54 0.62 0.68 12.2
EMA.TO 1.66 1.99 2.09 12.2
HLF.TO 0.46 0.52 0.56 10.3
PBH.TO 1.38 1.52 1.68 10.3


Read Answer Asked by LARRY on August 10, 2017
Q: Hi. My portfolio has no US ETFs. I have some individual US technology, financial and industrial stocks. (total 10% weight). Now, I'm planning to sell some of my Canadian stocks and to increase US stocks to 25 to 30% weight.

I'm in the process of adding more US stocks into my well diversified portfolio. My questions are 1) Do I need to buy into every US sector? If not, what US sectors should I concentrate into buying and what other US sector should I ignore? For instance, I assume I don't need US energy and US material stocks. 2) In my US portfolio, I have GOOG, ADBE, VISA, AIG, CGNX. What others US stocks should I also add?

I'm still unsure how to incorporate US individual stocks into a portfolio. Please give guidance... Have a great day.. Thank you in advance.
Read Answer Asked by Esther on August 09, 2017
Q: Re: your advice to Gary this morning.

Through BMO Investorline we transfer stock in-kind directly from RRSP to TFSA.

If there's insufficient cash in the RRSP, we'll contribute just enough to cover the withholding tax. So we don't have to sell any shares.

We're slowly winding down our RRSPs and transfer only enough, in low-income years, to be able to recover the withholding tax. (Seniors often have enough tax credits to make that possible.)
Read Answer Asked by chris on August 09, 2017
Q: I am going through my portfolio and finally looked at my balances per sector. Overall it isn't terrible, but I do have to make some changes. I have some Tech positions that I can lighten up and get down to 20% and I have some cash I can add. I have quite a few questions, so please take the credits needed.

Sector Percentage
Consumer Disc 11.75
Consumer Stap 6.41
Energy 7.28
Financial 16.16
Healthcare 5.12
Industrial 7.74
Tech 24.16
Materials 6.3
Telecom 3.69
Utilities 4.54
ETF's/Cash ~7


Should I consider Enbridge a Utility or Energy? Below i have it as a Utility. My other utility is BEP.UN. Should I add to one of these or add another position. They are ~2% each so I could go up on both, or add a third.

I see Magna and CCL are Consumer Disc, but can they also be considered Industrials?
For Industrial I have SIS, WSP, and QST. I was thinking of New Flyer and something else to get my industrial weighting closer to 15 %. Maybe ZCL or is that considered Energy? Or a US industrial?

Do you consider Chartwell Healthcare?(it is above)

Which sector should I focus on first and do you see anything that should be addressed right away. I know tech is heavy and the money should go to other sectors, but which area is lacking the most, Industrial, Utilities or International?

I have approx. 22% in US stocks, but I only have 1.75% IN TDB911 and about 5% in a few US ADR's for international exposure.
What ETFs should I look at to get international and emerging markets exposure?

How much of ones portfolio should go towards stocks Outside of of North America?

A lot of the companies I do own have international exposure such as CSU,MG,TOY,CCL,MX ect;

I am 39 and have fairly high risk tolerance if that makes a difference.

Thanks again for your great service and advice.
Read Answer Asked by Colin on August 09, 2017
Q: With so many potential valuation and growth metrics available, it's hard to know which ones are REALLY important. I would love to use a handful (3 to 6?) of metrics that I could use to screen companies in order to create a "to buy" list.
Do you have any recommendations for a group of "must-use" metrics?

(Some that I am considering are: EV/EBITDA, PEG, Price/Cash flow, P/B, Price to Sales, P/AFFO for REITs, Debt/Equity, Dividend yield, Dividend Payout ratio, and a company's history of raising the dividend)

Would I want to use different metrics for growth vs. value companies?

Also, is there some place that I can look up a company's metrics (i.e. EV/EBITDA, P/B, etc)?

Thanks!
Read Answer Asked by Jonathan on August 08, 2017
Q: Hello 5i Team

1 - Is there a readily available list of all the Sector and Industry classifications which are assigned to companies. I have had no luck finding it on the internet.

2 - Are the Sector and Industry classifications the same for the Canadian and US markets?

The only method I have found is checking the individual companies on the TMX Money website. A slow tedious process.

Thank you for the great service.
Read Answer Asked by Stephen on August 08, 2017
Q: BNN sited a report(back tested 20 years) that stated free cash flow yield was the best indicator of how a how a stock will perform in the future. Are there any US or Canadian etf's that use free cash flow yield as the key metric for stock selection. Also can you provide the top 10 FCF yielding stocks in Canada. Is there a stock screener that provides this information. Thank you for your great service.
Read Answer Asked by Ian on August 08, 2017
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