Investment Q&A

Q: Hi 5i Team:
I’m sold on the need to maintain sector diversification and use your suggested weightings for an income portfolio as my guide. It is how to classify pipelines that always gives me difficulty. I hold Algonquin, Fortis and Innergex to the tune of 10% classified as Utilities. I hold Canadian Natural Resources and Parkland Fuels which make up 7.0% as Energy. Now the problem, I also own Pembina and TransCanada to a total of another 6%. If I go against the TSX and say they are Utilities then I am pretty much in line with where I want to be. If I say they are Energy, suddenly I am overweight Energy and underweight Utilities. My question is do you have any data that would suggest which sector the pipelines are actually more strongly correlated to historically? My feeling is that they have probably moved down with Energy when the oil and gas sector gets beaten up, but also move down with Utilities when interest rates go up so not sure it really matters that much unless one has a crystal ball? But I try not to invest by feelings, would love to know if there is any hard data to support a decision? Alternatively, if you just look at the above and say “too much energy exposure for proper diversification” that’s good enough for me. Appreciate your guidance as always, thanks!

Q: 5i I need help in Rebalancing my RRIF. Maybe I am too attached to my stocks. I asked about BIP and BEP and you indicated my energy sector at 22% of my RRIF was high and I agree. I need less volatility but do require income. Of the 22% CPG-T =10%, FRU-T =30%, PPL=35%,SGY=8%, VSN=12% and WCP=5%.I like everyone, require your wisdom.

W

Q: I am looking to crystallize gains in PPL, and seeking an alternative in the pipeline/utility sector. I currently own ENB and TRP as well as FTS. What do you recommend for diversification in combination with those three?

Q: I was allocated some subscription receipts with IPL's recent deal. I am looking to add another pipeline company with a strong and growing dividend that is fairly value or under valued if you can find one. What would you suggest? Also, do you believe that energy infrastructure should be included in our energy sector exposure or utility exposure or other?

Thanks,
Jason

Q: I am a senior who needs dividends. Currently preferred shares are 20% of my taxable account(10% overall). I hold PPL.PR.M and ALA.PR.I. Could you recommend 2-3 other minimum rate resets?
I held and sold my Concordia shares the day before you took them out of the growth portfolio. Your advice has been great and very consistent. I wish 5i was around 50 years ago.

Thanks, Jim

Q: The share price of PPL has been dropping in 10 of the last 11 trading days (about 5% so far). Any reason for this daily SP walk down?

Q: Hello,

Two part question. What news is there to explain why PPL is down 2% today and IPL up 2% (as of 2:50pm)?

Also, if we assume that the sector moves largely as a group with occasional daily fluctuations, would it not make sense to SELL holdings of IPL on a day like today to replace it with PPL given the roughly 4% gap in their daily movement? I watch these two and it seems that this approach could yield small but consistent growth.

Thanks!

Q: Hello Peter and team: I am looking at the above rate reset preferred shares, both of which have a minimum reset rate of 5.75% at maturity and are currnetly yielding approx. 5.7%.
Assuming that interest rates are not set to rise substantially in the next few years, what other factors and risks may cause these preferred shares to drop in price and do you think that these are safe to hold for the yield for a 5 year+ hold in a TFSA. Is there any difference between the M & K series and which would be preferable to hold at this time.

Thank you for your advise.
Joseph

Q: Could I please have your opinion on Pembina's recently announced earnings. Thanks Brian

Q: Hello 5i Team,
Utilities and pipeline companies are counted as 'blue chips' in many retirees' portfolio due to 'safe' dividends and some growth opportunities.
With the current thesis of the decline of fossil fuel in the context of low carbon future, what are your thoughts on these companies? Would there be a change of guards with these industries being replaced by renewable energy and clean tech energy in the next decade?
I have the following names which I am concerned about where they will stand few years from now? Which are the weaker ones that I should sell?
PPL, KEY, AQN, TRP, FTS, ENB.
Are there Cdn or US companies that you can suggest as future 'blue chip' in the renewable energy and clean tech energy industries? I already owned BEP.UN. Thanks.

Q: I sold all my energy and pipeline positions in early 2015 and currently have no such holdings. I am considering slowly re-entering this space. Do you think it is a good entry point for Ala, ppl and ipl? Any addition, deletions and modification would be appreciated. I am not adverse to risk. Thanks for all the good advice past, present and future.

Q: What do you make of the PPL 2015 results?

As well, what is your view in terms of growth in future earnings, and dividend sustainability and increases going forward?

Thanks.

Q: What do you think of the bought deal?

Q: I would appreciate your thoughts on adding 1% to an existing positions in PPL and ALA at this time. Current utilities allocation is 8% as follows: ALA 2.5%; PPL 2.3%; BEP.UN 3.2%. Alternatively, would you suggest replacing one of these holdings with either FTS or EMA?

Q: Considering replacing IPL with PPL. Giving up some dividend yield but think the possible growth may be more attractive.
Or am I comparing oranges with oranges? Your thoughts please.
Thanks, Dave

Q: I am having difficulty determining and rationalizing payout ratios. Different sites give different ratios. A couple days ago you answered a question on Pembina stating the dividend is safe. GlobeInvestor tells me the eps is 1.07 and the dividend per share is 1.74 giving a payout ratio of 162%. Several other prominent dividend companies also show payout ratios over 100% using the same methodology. Am I missing something or are these dividend payouts at risk?

Thanks so much!

Gary

Q: Hi Agent. Would PPL be a good long term investment. Eddie.

Q: Hi- ENB and ALA are doing well but Pembina has been lagging for the last few days. Is it considered higher risk? I am thinking of adding to my position. Thanks

Q: Hi 5i team,
Among the pipelines, is there a reason why PPL has dropped much more than the others-25% in the last 3 months. Which is your favorite pipeline for income? Thanks

Q: I welcome thoughts on PPL after this pullback from $52.Is PPL indirectly pulling back with the rest of the energy space? How tied to commodity price is PPL?