Investment Q&A

Q: 5i,

Could I have your thoughts on this trust? SIN.UN
Is SIN.UN an ok buy for a income fund or would you recommend something else?

Thanks

Q: 1:10 PM 3/19/2018
Hello Peter
I would appreciate it if Peter could answer this question as he has years of experience as a fund manager and I would respect his considered opinion....

We have a large Blue Chip dividend-growth income portfolio of Canadian stocks. It currently has unrealized gains of about 25% and has a dividend yield of 4.6%. We run this equity portfolio like a private pension fund for ourselves.

We are quite aware that a major market "correction" or crash will come sometime in the next year or so and would like to position the equity part of our portfolio for that event. There are really only three options that we can see.

OPTION 1. Sell all our stocks and go to Treasury bills and 2 to 5 year Government Bonds, for a yield of about 2 to 2.5% in interest income. We would be giving up a 4.6% dividend income stream in exchange for a 2.5% interest income and lose the advantage of the dividend tax credit. Additionally we would be hit with a massive taxable capital gain pushing us well into the topmost tax bracket.

OPTION 2. Do Nothing. If during the crash our stocks dropped 50% in price it wouldn't matter as we would plan to neither sell nor buy any more shares up until and during the crash. If as a worst case scenario, dividends were cut by 50% on all our shares [most unlikely] then our dividend income yield would still be 2.3%, and with the Dividend tax credit would still beat the 2.5% interest income we would be getting if we had sold all our stocks and switched to short-term bonds and bills as in Option 1.

So if we choose Option 2 and ride out the market crash fully invested, then we are no worse off for income than choosing Option 1 and selling out and going to "cash", and we don't get hit with a massive capital gain tax bill.

OPTION 3. As in Option 2, sell no stocks in our Cash accounts but sell everything in our 2 RRIFs, and 2 TGIFs which together amount to about 10% of the overall portfolio. We could sell all the shares in them easily at any time at virtually no cost in our discount brokerage, park the money in GICs and no capital gains taxes would be payable at all. The proceeds would be ready for buying blue chip dividend-growth yielders when the time seemed right.

In simplest terms the object is to preserve capital as much as possible while at the same time allowing withdrawal of a reasonable predictable income.

What did Dividend Aristocrat type portfolio fund managers, or Pension Fund Managers Like Peter do in anticipation of the market correction in 2007 - stay invested, change asset allocations, become more defensive [how?], do sector rotation, adjusting allocations among the 11 TSX sectors - out of what and into what? Anything else?

If you, Peter were responsible as a portfolio fund manager for running our equity portfolio which is essentially a Canadian "Dividend Aristocrat" portfolio, how would you handle it in the years ahead considering the high probability of a major market correction/crash? Would you choose one of these options or would you have a different strategy?

Thank you.............Paul K

Q: ENB is yielding close to 6.5%. I have been hearing about an MLP announcement and it's lack of material impact on the company.
Is the dividend of 2.68 on EPS of 1.65 sustainable (even taking in to account significant amortization of infrastructure)?

Q: Hello Peter / Ryan and Team,

I have the model balanced portfolio other than KL for AEM, a tiny position in MG, and am still missing Teck.B. My thoughts for new money is to either get MG up to a proper position size (approx 4%) or to buy Teck.b for a 3% position.

What are the pros and cons of each. Thanks for all your hard work.

Wes

Q: How much debt does Enbridge have? If interest rates go up 1% in the next 12 months what is the additional cost to them and how does this impact free cash flow? Thank you as always.

Q: Hello, I would appreciate your thoughts specifically on Verde Agritech and generally about how to interpret After Tax Net Present Value (NPV) reports of companies and if they're something of value to consider when investing.
Verde Agritech has recently been approved for 150K tonne of fertilizer production which at $28/tonne looks to be about $0.1/share, which seem like very good initial production in a company with no debt.
The NPV of the company is extremely high at $1.8 billion. That number is so large compared to the companies current value it seems like pie in the sky, but it also seems like the company could theoretically reach that. I don't know what to do with it.
I do see an extremely likely route for the company to reach 600K and about $0.4/share.
Thank you for your opinions on this interesting little company.

Q: I currently hold PEGI at a small loss. It was picked by our advisor when we had one. I'm now managing the account and am less familiar with it so am considering selling and replacing with Crius, which at least I have 5i to support me with.

Both have their risks...what are your thoughts on the switch?

Cam.

Q: I need to add to my healthcare sector. Currently own GUD, COV & PLI. What 2 or 3 stocks would you recommend & could you please rank them in order of preference.
Also, not happy with the momentum at CHE.UN. Would you hold & if not, what would you replace it with? Doesn't need to be an income stock.

Thanks

Q: How do you feel about the blackberry and Microsoft partnership, and what does this mean to blackberry? Would you recommend buying BB if one was to look at growth in a tfsa over the next 2-5 years?

Q: I currently hold 3% on VBAL should I increase to 5% or would you suggest to add another ETF VRGO. Currently ETF portfolio I hold VE, VEE, XSP, VBAL - 3% each
Do you recommend I add another VGRO ETF or just add 2% each on above ETF?

Thanks
Hector

Q: good morning, I would appreciate your opinions concerning the canadian dollar and if it should get into the sixty cent range and the impact on our stock market ? thanks

Q: We have had 500 shares of orbk with a nice gain in capital. it seems the ride is over with the sale to klac. Should we ride it out to the conclusion and have some cash and klac shares in trade (pay some capital gains), or sell at current price (pay more capital gains), to redeploy the funds.?
Your advice is always appreciated.

Q: Brick Brewing has gone up in price recently. Do you consider it to be overpriced?

Q: I keep hearing about TOY being tied exclusively with Toys R Us but I have seen Spin Master toys being sold in numerous outlets including: Canadian Tire, Mastermind and Walmart. Shoppers even has some of their product like Paw Patrol.
It seems the recent decline has been a bit over done?

Q: Hi, my brokerage co. offers technical alerts and top picks on a daily basis. The top picks have a price target and a time frame to reach that target. On March 6th one stock trading at $5.94 was predicted to reach $10- $11 in 29 days. The very same stock on March 17th, trading at $5.85, was predicted to reach $7.50-$7.90 in 9days. So my questions are, does the second prediction cancel the first ? I realise that both are possible given the time frame but would that be the correct way to look at it? Also when they talk about days to target is that calendar days or trading days? The same question applies to moving averages, 20 day 50 day etc, calendar or trading? Thank you

Q: Hello 5i,
5i has RME debt to equity at .21 last twelve months. Meanwhile Yahoo has total debt to equity as 165 (most recent quarter). Is this due to an RME acquisition?

Thank you
Stanley

Q: Hello 5i, I purchased shares on the Telus IPO in 1990 and 1991 and am about to sell them but I need to find out what the adjusted cost base is.
In 1990 they were 12.00/share and 1991 they were 15.00/share.
Is there an easy way to find out what it would be or is there a website that you know of that could calculate this.
Thanks

Q: Could you comment on the Hecla takeover of Klondex Mines, please? I've been a long-time holder of Hecla and sold my Klondex a little while ago a higher levels. Thanks.

Q: Hi Team, We are wondering if you would still recommend WPK (we already have CCL at a max. percentage of our portfolio) or would you have other companies in consumer cyclical that you would prefer?

Q: Knight committed to up to $25M in the partnership deal announced this morning. It is a fairly large amount compared to some deals. Is this a big deal?
Thanks.