Investment Q&A

Q: I was thinking that there would be some negative news regarding oil and gas loan losses and also consumer loans. With this as a backdrop I was wondering if you think the banks will see another sell off next week during their earnings release ? I see no real catalyst to drive them higher. Would appreciate you thoughts. Thinking about the last quarter and the money that could have been made by selling and coming back after the hit the banks took.

Q: hi.. Just sold 150 shares of this bank and would like to know of 2 stocks you would recommend as replacement no oil as overweight! thanx in advance Cliff

Q: For money that will be needed in 5 years I am considering investing in some of the new recently issued bank pref shares.

TD.PF.G ,RY.PR.Q, BNS.PR.E

Assuming the shares are all called in 2021 at $25 the current yields would come out to be approximately 4.5%. This would be equivalent to approximately 7.7% on an interest rate.(depending on income levels ) If the banks issued a 5 year GIC at 7.7% the lineup would be long.

With this in mind, is the only realistic risk based on the possibility of interest rates rising?

Also, any thoughts how much these would get hit if interest rates rose , say a full 1%.

Great service & many thanks.

Paul

Q: Good Morning
I hold 4 Canadian banks CM, TD, RY and BNS in an unregistered account. The bank stocks comprise just under 20% of my portfolio and each has approximately a 50% capital gain. My only other financial stock is a 2.5% position in PWF. Capital gains in my account this year will likely be taxed at 15%. I am considering selling one of the bank stocks (perhaps CM) and investing the proceeds in SLF. I have chosen SLF for it's relatively low valuation and secure dividend.
Is reducing the allocation to Canadian banks appropriate, or does the tax which has to be paid cancel the benefit?
Which bank would you sell?
Is SLF a suitable alternative or is there another company that you would prefer. I already have full positions in CNR and BAM.A.
Thanks
David

Q: We have 2 Rrsp accounts. The first one contains mostly 5i recommendations with a focus on dividend income and some growth. We would like to structure the second account to be more conservative and withdraw the dividend income. We like the Canadian banks ie RY and BNS as the dividend is safe and pays well and even when there is a sell off in the banks (including 2009) they eventually bounce back thus preserving capital but in the meantime one just collects the dividend. i know you would say that we should diversify so my question to you is what other stocks would you suggest that pay a 4percent dividend and have the security of the banks over the mid to long term or until Interest rates increase to make GICs/bonds an option.
Thank you.
M

Q: Recently read an article in Globeinvestor entitled "It's time to check out the dazzling yields of Canada's big bank preferred shares" a recent offering from them pays a dividend of 5.5% and after 5 years is reset to 4.8% over the 5 year Canadian bond rate. My question is what would the symbol be or how could I purchase this,I trade online and that's the vehicle I would like to purchase them through,appreciate your answer ..thanks

Q: RBC and a number of the other banks have recently issued preferred shares(series BM ?) where the dividend rate will reset every five years at a rate equal to 4.80 per cent over the 5-year Government of Canada bond yield. Do you think these are a good buy for income and safety? If yes are they available now and what is the symbol of the Royal Bank version ? Thanks Ken

Q: I have a full position in the major banks and a half position in NA. I sold NA this morning after it dropped $1100, and all the other banks are down big time as well. What hit the fan?

Q: Because I am primarily a dividend investor , I don't really have a "sell discipline" for bluechip stocks and simply ride the ups and downs while dripping dividends. This has been painful for pipelines and REITS and banks etc, some of which are down substantially. Some would say it's wiser to sell at breakdown points such as 200 day average, or sell a portion when the stock is up 50%. I have only sold rarely for re-balancing and so have taken some lumps lately. Any words of re-assurance would be appreciated.
Thanks

Q: Canadian banks have all dropped in value YTD by up to 6%. I understand that this is due in part to concerns about energy-related loan losses as well as high consumer debt levels. What is your call on what will cause the declining trend to stop, and when that might be ? From a technical point of view, where is the support level for RY ?

Q: A couple banks have recently issued rate-reset preferreds at very favorable terms, 5%+ and a floor at reset. Why would tap the equity market when the cost of debt is so much more favorable to raise capital?

Q: Can you comment on the recent issue of Royal Bank reset preferred
shares Series BK? Are they a suitable investment in the current
climate or are they in the same boat as other reset prefs? Thanks.
Joe

Q: Royal's latest preferred offering seem to be surprisingly good one, is it?? 5.5%yield and 4.53% reset. Is it a good buy? How will future interest increase effect the price? Is it trading, has a trading symbol?
Many thanks for your help. J.A. P, Burlington

Q: Which Canadian bank is your favorite, being the one that will offer the most growth and capital appreciation over the next 5 years? TD, RY, BNS, BMO, or CM?

Q: Just wondering about your take on the Canadian Banks going to the yearend. I bought them in the spring for a long term hold and am down about 10%. I know short term trades are mugs game but am considering them for some early tax loss selling and buying back later on in the fall, after 3Q earnings and the election. Doesn't seem to be much catalyst for them to go higher and with all the uncertainty I wonder if they'll drop some more.

Q: 1:10 PM 26/08/2015
Hello Peter
I am interested in buying one or two of RY, CM, TD, SLF, GWO, MFC. Would you comment on the robustness of their balance sheets and provide some numbers on their Debt/Equity and Debt/Cash Flow ratios, Dividend growth rates, and possible "Black Swan Events". I look at various financial website sources and the numbers for these companies are all over the shop.
Thank you. Paul K.

Q: Why RY is heading lower after they report good earnings and increase their dividend.
Did I missed anything on earnings.

Q: What is your opinion in buying Canadian bank preferred shares in the income
allocation portion of your portfolio as opposed to bond ETF's?
Best regards,
Oleh

Q: I received a lump sum and for a short time I would like to put the funds into some stable stocks who pay a quarterly dividend and who's X dividend date is from now until the end of April. I would like an annual yield of 3.5 - 8%. I will then bleed the money out into a dividend growth model of 5i stocks. I have looked at 28 stocks and only found 2 Ry 4/21 & pot 4/9 x dates. The stocks I have checked are Ala, bus,td, bce, enb, xtc,and,ipl, key,pki, ppl,stn,vet,ten,win, syz, ago, cox, bin, dh, slf, wsp, t, wsp,van,tcp. Thank you very much, your site has incredibly valuable information which I check each day. mike

Q: Hi guys,

I want to limit exposure to the financial sector to 20% of my portfolio. I currently own TD and BNS and with the recent pullback in the major CDN banks, I'm thinking of adding 2 additional banks and I'm thinking about BMO and RY. I don't want to invest in an insurance company since no one can be sure when rates go up and I'm not sure about Home Capital Group since it is more concentrated in its business than the major CDN banks and the yield on the major CN banks are twice that of HCG? Your thought? It is risky to hold 4 major CDN banks in my portfolio if overall exposure is capped at 20%?

Thanks,
Jason