Investment Q&A

Q: With the latest market dip I’m looking for some very solid, undervalued companies. I think BAM.A and TD would qualify. I have enough growth stocks, just want to deploy some cash to buy some clearly undervalued good companies. Thanks.

Q: Purely in terms of dividend sustainability could you please rank TD, RY, BNS, NA, CM and BMO and briefly why? Thanks.

Q: You have referred to some stocks and ETFs as CORE. What percentage of portfolio would you recommend as core (relative to satellite holdings) and what would be the number of core stocks and ETFs for diversification. What core stocks and ETFs across all sectors would you recommend?.

Q: I am not invested in the market right now with the exception of a couple of multi family REITs in my RRSP. I have a lump sum that I would like to start investing gradually. Looking for stable names with good dividends that will not reduce or cut their dividend. I am thinking of starting with ENB, TD and BCE. Do you like these three and can you recommend a couple others. I would like these names to be the foundation of the portfolio and then I will add more growth oriented names as opportunities arise.

Thanks,
Jason

Q: I am just getting started in DIY investing and have been introduced to 5i by family members who have had great success. I am looking for five-ten really solid Canadian dividend paying stocks to form the core of a balanced portfolio. In my TFSA, I have BCE, TD, ENB, BNS, SLF. Should I be looking elsewhere? Thank you!

Q: I have decided to go with your recommendation and move a small portion of my portfolio to a robo-advisor. Few questions:

1. I have losses on PPL(37%) and TD (15%), Would you sell now and transfer the cash to or hold on to these until they recover?
2. I have narrowed down to two robo-advisors. Questtrade and Wealthsimple. Which one would you pick?

Thanks again for quick and helpful responses,

Q: Dear 5i team,
NA, CM and RY have seen recovery to an encouraging extent.
BNS, TD and BMO much less so.

I do bear in mind that not all banks were/are uniformly exposed to risks precipitated by the virus; those that needed to increase reserves against losses have done so I believe. I’ve not sourced reports indicating any bank is not prudently shored up with loss provisions.

Would it be too soon to start a monthly purchase of BNS, TD, and/or BMO - small amounts, say $1k?
If it is too soon, what are you looking to hear, read about, or see happen that would tell you buying can begin?

Thank you so much!

Q: A respected analyst stated: DO NOT BUY THE BANKS!!!
Here are his reasons:
- Not only are they facing pressure from a flat yield curve but every aspect of their business is being disrupted by digital-first competitors.
- FinTech companies (both public and private) are disrupting every single one of the revenue channels at the banks.
- There isn't a single reason to own bank stocks other than the dividends however I’d argue if their businesses decline as much as I think they will those dividends might not be safe.
- There are better industries to find dividends where the companies are growing earnings and increasing their dividends. Personally I don’t see any of the banks increasing their earnings for a long time especially if these VC backed FinTech companies continue to crush them.
- If you want exposure to the financial industry I’d suggest going with the digital payment companies: $V $MA $PYPL $SQ

What are your thoughts re: only focus on fintech and digital payment companies in your portfolio?
I note that your top pick for banks in your income portfolio is BNS.TO, which you constantly recommend as it appears "undervalued", however BNS.TO has made 0% capital appreciation over 5 years. Is it time to switch to fintech?

Q: I am going to sell TD Bank in a cash account for capital gains to be used against capital losses earlier this year. I could buy it back immediately or purchase something else. I am thinking of PPL. Which would you pick for reasonably safe total return over the next 2 years?
What Cdn non-tech stock would you pick for best reasonably safe total return over two years?

Q: My daughter is selling BNS for a tax loss. For a replacement would you favor a US bank like JPM at this time or another Canadian bank like TD or RY? Her other financials are BAM and GSY.

Q: What is the current stock price per book value of the above 3 banks? The

Q: Hello,
I have been holding Laurentien Bank for a few years thinking it was 'cheap' as it was trading below book value. It's done terribly should I hold/sell any recommendations on an alternative holding for the long term.

Q: Hi,
In a previous question you responded:
" We would rank the banks: TD, RY, BNS"
Should I sell my BNS and swap for TD or RY? I've held it for years and basically just received the dividends.
Thanks

Q: I have about 29.3% of my portfolio in financials. Is this too much? I'm above water on all except BNS with FSZ about even if I include the dividend. Which would you suggest dropping if I'm too heavy in this area & in what order? Thanks,as always for your wonderful guidance
Dave

Q: Hi i5,

According to "Buffett Indicator", when it's in the 70% to 80% range, it is time to throw cash at the market. When it moves above 100%, it's time to lean toward risk-off. Now Market Cap to GDP Ration > 100% means stocks in bubble territory. Do you think Canadian stocks may also in bubble territory? If US in bear market, do you think the above Canadian stocks which I am holding can be survived? Perhaps, should we start to off load which may be in danger during the bear market into cash, or switch among balance or income portfolio. Any suggestion?

Q: If you had extra money to add to 1 of these stocks which would you choose and why?
Thx for great service.

Q: I have some cash to deploy in RRSP and wonder if now would be a good time to go a little overweight on these banks. The prices look good to me but are they really being undervalued or is the real impact of the pandemic on banks going to be bad.

Q: I have done well on Decartes, thanks to you! I am thinking of selling some of it and buying TD as it has been down. Do you think this is a good trade, I am thinking technology sector may cool off and financial may rebound next year. As Decartes is still climbing, do you think it would be better to hold for continued growth. Thank you!

Q: top 3 american, top 3 canadian, banks to invest in ?, and a reasonable projection and why, or do you not recommend banks at this time?

thanks

Q: Dear 5i team:
Your software indicates our family’s investments are too Canadian-focused. However, I prefer our “home bias”, for three reasons:
(a) most of our assets are non-registered, and the dividend tax credit is especially favourable for Canadian source dividends in a province such as ours (Ontario);
(b) I like supporting the companies that I invest in (e.g., we buy Peller family wines, since we own their shares);
(c) but most important, many of the “Canadian” businesses we own are surprisingly international; among our top 20 equity holdings are:
Alimentation couche-tarde (Circle K is world-wide);
Brookfield Asset Management (globally focused company that invests wherever the opportunities are);
CGI Group (revenues are 84% outside Canada per 2019 annual report);
CP Rail (significant U.S. revenues);
Fortis (65% of earning are in U.S.);
Manulife (growing Asian revenues);
Restaurant Brands International (most of Burger King and Popeye’s restaurants are outside of Canada);
Shopify (not sure, but suspect international revenues are growing faster than Canadian revenues);
TC Energy (dropped “Canada” from its name to reflect its growing U.S. presence);
TD bank (substantial and growing U.S. presence);
Anyways, the above-listed 10 stocks represent about one-third of our overall equity holdings (in absolute $ terms), but I would not consider these companies as being “100% Canadian”. I wonder whether your software could be rejigged to reflect the relative percent earnings (or revenue) contributions, broken down per Canada, U.S., Europe, Asia, and so forth. I suspect our home “bias” is not nearly as substantial as it appears.
Ted