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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: Hello team,

I have been wanting to ask you this question about the relationship between share price, dividend, and yield. I am going to use KWH-UN whose current SP, annual dividend, and yield are $6.01, $0.82, and 13.56%, respectively.

Suppose I buy 1000 shares of KWH. I understand my purchase will cost me $6010.00 and I shall earn $820 in dividend after a year on this investment which amounts to 13.65% of my purchase price. Now let's say that in the second year share price increases to $8.00 and the company continues to pay $0.82/share in which case my investment yield is still at 13.65% but that of a new investor will be 10.25%. Is my understanding correct?

If I am correct then, it is no-brainer that one should buy a company like KWH or ENB when they are in some sort of predicaments but have proven reliable in maintaining their dividend over time. The reward will be higher yield for the contrarian/patient investor if the company continues to pay the same amount of dividend per share.

Hope I am getting it but I am sure you let me know wherever I am going wrong on this....Thanks as always!

Now back to reading more of the questions/answers on 5i site...

Read Answer Asked by Saeed on July 24, 2018
Q: Is there a financial ratio or ratios that can give an indication of the risk in a stock price to changes in sales? I have been looking at operational gearing which tells you how sensitive profits are to reduction in sales. I also read that a high debt to shareholders equity means that changes in profits have a large influence in share price. Not sure I understand why that would be the case. Could you comment on both these measures please and maybe suggest others.
Read Answer Asked by Andrew on July 16, 2018
Q: This is important to me. I currently have 42 stocks in my rsp at 452k. I tried for an evaluation years ago thru 5i but I an not a computer guy and couldn't do the excel stuff and an not interested in outsiders knowing my business.
At 66 I want to manage about 10 high paying dividend stocks as apposed to giving my life savings to a stranger. I realize that you are not an advisory service but I would like concrete recommendations for my question. (452k worth if possible) Thank You. James

Read Answer Asked by JAMES on July 16, 2018
Q: Hi All at 5i! Hope you are enjoying the summer! I was wondering if you could recommend a book ( or other source) on investing for a total novice. A friend of my son has started on his working career and has accumulated some money. He has no knowledge of investing and would like to start learning about the topic. I recommended 5i to him, and he is considering joining after he has a rudimentary understanding of the world of investing. Hope you can help . Cheers, Tamara
Read Answer Asked by Tamara on July 16, 2018
Q: Dear Mr. Hodson and Mr. Modesto,

I'm helping a friend construct a portfolio worth $375,900. She is a single mother who is planning to retire in a few years. All her children have grown up and no longer require financial support.

Besides CPP and OAS, she also has some other income from other source and wish to supplement her spending with dividend income from the portfolio. She's asked me to help her to contruct a moderate growth portfolio. She said a yearly dividend income of $10000 will be sufficient.

Now, her trading accounts have:
BCE- 73%, SLF- 12%, BMO - 11%, Cash - 4%

Here are my questions. Please deduct as many credit as you wish from my question credits.

Her new portfolio will generate a yearly dividend income of $12954 (yield 3.44%) from $375,900.

Financial -22% - keep the BMO(11%), SLF(12%)
Utitility -16% - AQN, BEP.UN, H, KWH.UN
Energy -10% - ENB, WCP, PKI or TRP
Consumer -16% - PBH, ATD.B, DOL, TSGI
Industrial -11% - NFI, WSP, TCL.A
Health - 4% - CSH.UN, GUD
Technology - 12%- CSU, ARKW, Please suggest: Nasdaq index?
Telecomm - 6% - BCE
Cash - 3%

My questions are:
1) For a moderate growth portfolio, is the sector allocation appropriate?
2) Do I need to further diversify BMO and SLF?
3) In each sector, do you have any suggestions for the right stocks? Feel free to add or delete.
4) Please let me know which stocks you would recommend to add first?
5) For a person close to retirement age and no experience investing in US, is it necessary for her to invest abroad? What's your opinion?
6) All the above proposed stocks, which growth stocks should go into the TFSA? What are your top 5 picks among the growth stocks above?

Thanks as always
Esther
Read Answer Asked by Esther on July 11, 2018
Q: I am 75% in equity with less than 10% in Canada, and mostly US with tech emphasis, plus Global and EM. The rest of the 25% is invested with a well known active manager (0.6% MER) of corporate bonds who invested in short-term corp bonds of no more than 2 years duration plus floating rate bonds. No Government or long bonds. With rising interest rate albeit not rapidly over time, bonds are not really a place to be in. Corporate bonds can lose capital as well if there is a significant downturn. What is your view on holding cash in MMF in lieu of corp bonds as a fixed income allocation of a portfolio in the foreseeable future as capital preservation? USD MMF instead of CAD cash?
Read Answer Asked by Ford on July 10, 2018
Q: Due to health problems my Doctor advised that I cease to manage my investments through a bank self managed brokerage account. I will transfer my assets to a advisor associated with Hollis Wealth. Because HW is not a bank I had to sell my holdings and then transfer the cash. The investment will be made this week. Should I invest all the funds or spread it out over a period of time? It wii be a very long time investment.
Thanks for your advise over the past years.
Read Answer Asked by Warren on July 10, 2018
Q: Hello Peter et al.

With all of the latest rhetoric about trade wars between the US and a lot of countries I have lightened my stock portfolio from about 97% to about 75% with the remainder in cash. I have in the last few years worked hard to get the increase in my RRSPs value. I am looking to put the cash into something that provides the following:
1. Quick access if necessary to re-invest again when I feel the time is right.
2. No loss of the capital with what the cash is put into.
3. Maximum rate of return for the above two criteria being met. I know it will not be high.

Is there a Money Market ETF or something similar that meets my three criteria. Because the cash is in my RRSP accounts I can’t take it out without paying tax on it which I do not want to do.


Thanks,

Brendan
Read Answer Asked by Brendan on July 09, 2018
Q: I have followed 5i research since 2013 and used the model portfolios to tremendous advantage resulting in more that doubling the capital in my portfolio. I have been all Canadian from the beginning having fear of the US stocks. (and still do) However I am wondering if its time to dip into the US and International markets. Do you think it is appropriate at this time and how would you approach this. I could just transfer some stocks to a US account. I am a retired growth/income investor. By the way I followed many talking heads on BNN before 2013 and none impressed me more than Peter. That is why I took the plunge into the 5i Research philosophy. Many thanks Peter.
Read Answer Asked by Martin on July 06, 2018
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