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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: What is the appropriate payout ratio to look at for Enbridge? They just raised the dividend 10% which signals optimism; however, I'm looking at a Motley Fool article today that argues earnings and free cash flow are both below the amount of cash needed to pay the dividend. I believe it likely the author is looking at the wrong metric and wanted to get your view. How comfortable are you with ENB's payout ratios?

Also, what is the yield assuming current price and the newly raised 2019 dividend payments?

Many thanks.
Read Answer Asked by Chris on December 14, 2018
Q: Hi team,
I was waiting for volatility to subside before I asked this question, but that may never happen. I was reading the transcript of the SQ conference call some time ago and something caught my attention, but this is not a SQ question. It is an EB question. In her comments on the financials, Friar noted It was Square’s 1st Q of GAAP profitability with a net income of $20M. She said the reason for the positive quarter was SQ marking to market their investment in EB after its recent IPO. Otherwise, SQ had a loss of $70M. What are your thoughts on EB? Despite the tech wreck the fall, EB has held up quite well. I have read some positive reports on it and SQ has invested in it. By the way, I am not likely to buy EB at this time, as there are a lot of great stocks on sale lately. Just curious on your thoughts for the future.
Thanks again,
Dave
Read Answer Asked by Dave on December 14, 2018
Q: Can I get your opinion of Co-Operators General Insurance. It is small but pays a nice dividend with a low p/e. Thanks Dave.
Read Answer Asked by David on December 14, 2018
Q: Parex has been on a continual decline. The possibility now of a sale of their mature assets before year end does not look good. As their share price is now very cheap I plan on increasing my holding. If there is no sale with their existing assets there would still be a considerable increase in cash flow in 2019 based on $70-75 Brent.
Your opinions please?
Read Answer Asked by Peter on December 14, 2018
Q: Could I get your opinion on RCL? Looking at it as a 'dividend grower' for the long term. Right now the stock is trading close to a P/E close to 5-year low, stock price down close to 15% for last 12 months, and the Yield at a 5 year high. Should I be concerned about any impending economic downturn that may affect discretionary spending? And it has a LOT of debt (those ships aren't cheap).
Thank you!
Read Answer Asked by Mike on December 14, 2018
Q: Good Afternoon ,
With all this recession talk lately have you ever thought of building a model portfolio that will do well or at least hold its own during a recession? Personally I think the economy is in pretty good shape and the probability of a recession occurring in the next 12 months is less than 20%, odds certainly pick up past that as we are getting later in the cycle and could certainly see a recession within the next 24-36 months. Is a recession portfolio something you are considering? Or will you tweak the B/E model when the time is right to help mitigate some of the downside? For example a larger weight in staples, telecom, utilities, maybe some gold and cash? I feel the Income model is certainly more defensive in nature, perhaps an investor could move from the B/E model to the Income for a period of time ? I realize the average recession only last around 9 months give or take but I also believe that markets can go down significantly during recessions 20-30%. Any thoughts on a strategy here and how to better position a portfolio for the potential of a recession in 2-3 years time?
Thank-you
Read Answer Asked by Chris on December 14, 2018
Q: Being retired I have been slowly moving away from equities to more fixed income. I still am 80/20 equities to fixed. My strategy has been to ladder 5 Year GICs. I don't have much in the way of bonds other then some CBO, XHY, and ZEF. All 3 bond ETFs have gone down which kind of confuses me as I thought that Bonds were to preserve capital and pay interest. Maybe you could explain this to me? I just bought a 5 yr GIC that pays 3.47% compounded annually. Seems to me that laddering GICs returns more than a Bond ETF AND has NO RISK. Am I missing something?
Thanks for the help with this.
Read Answer Asked by Rudy on December 14, 2018
Q: Would you say this is an accurate way to characterize Knight Therapeutics?

The Globe and Mail reports in its Monday edition that the markets are on edge and trend followers are running for the exits. The Globe's Norman Rothery writes in the Inside the Market column that it is hard for companies to raise money while fear stalks the land. Mr. Rothery says they risk becoming zombie stocks that shamble around a bit before keeling over. He says even in good times, firms with negative earnings fare poorly and are, as a group, best avoided. For the current column, Mr. Rothery says he focused on stocks that are, potentially, in much more dire circumstances. To find them he looked at earnings before interest, taxes, depreciation and amortization or EBITDA. It is bad enough to fall into the red after paying normal and recurring business expenses such as interest and taxes and other expenses; it can be deadly having negative earnings even before these essentials are paid for. Companies with negative EBITDAs are in a particularly precarious position and may be zombies. Matters get worse when the markets tumble and it becomes next to impossible to borrow money or to sell stock. Mr. Rothery's potential zombie stocks are Hexo, Knight Therapeutics, Advanz Pharma, Katanga Mining and Paramount Resources.

Thanks as always,

Rob
Read Answer Asked by Robert on December 14, 2018
Q: If i buy a stock on the 19th and the ex dividend date is the 20th will i recieve the dividend for that month ? Or is it not considerd bought until the settlement date?
Read Answer Asked by Keith on December 14, 2018
Q: Hi - I have no REIT exposure and am considering adding either VRE or XRE. They are both promoted as tracking the TSX/S&P capped REIT index. When I overlay a graph of their 2 year price performance sure enough they are virtually identical. At first glance it would seem a no brainer to go with VRE since the MER is 1/2 that of XRE (.35% vs. 61%). However, it also appears XRE pays a substantially higher dividend ( ~ 4.7% vs. ~ 3% depending on the source I check). Can you shed any light on why the difference in the dividend when they are both tracking the same index? Do you have a preference for one over the other? Thank You
Read Answer Asked by Morgan on December 13, 2018
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